Company Name: EZION HOLDINGS LIMITED
| Research House: DMG | Price Call: BUY | Target Price: 1.25 |
Brokers are upbeat about Ezion Holdings after a slew of orders, the latest an US$80 million ($100 million) contract over four years to provide a service rig to a major energy company for its oil and gas activities in Latin America.
Singapore’s offshore and marine sector has seen a strong flow of orders since late last year as oil companies boost capital spending, encouraged by persistently high oil prices.
Ezion shares were up 1.5% at $1.015 and have risen more than 50% so far this year.
While Ezion did not disclose the name of the customer, OCBC Investment Research said it is likely to be Mexican state oil company Pemex.
OCBC estimated the return on equity (ROE) for the project to be around 34%, higher than Ezion’s overall ROE of about 22%. OCBC raised its share price target on Ezion to $1.21 from $1.05 and maintained its buy rating.
DMG & Partners Securities said the new contract is expected to add US$5 million per year to Ezion’s bottom line from 2013 onwards. The company is pursuing more service rig orders, especially in Asia, Africa and Central America, it said.
DMG has a buy rating and a $1.25 target price on Ezion stock.
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