Company Name: EZION HOLDINGS LIMITED
| Research House: UOB KayHian | Price Call: BUY | Target Price: 1.42 |
UOB Kay Hian raised its price target on Ezion Holdings to $1.42 from $1.34 after it said the offshore services provider won a third service rig contract from Mexico’s Pemex.
Ezion shares were up 0.65% at $0.780 at 9:45 a.m., the FT ST Small Cap Index edged up 0.3%. The stock has risen 19% so far this year, outperforming a 6% gain in the index.
The charter contract is for four years with total revenue at US$86.3 million ($110 million) or US$21.6 million per year, and UOB estimates the project to yield a net profit of US$7 million, adding 7% to its 2013 and 2014 earnings forecast.
The project also has a “very high” return on equity (ROE) of 42%, well above Ezion’s minimum project ROE requirement of 30%, said UOB and kept its ‘buy’ rating on Ezion.
The broker expects Ezion’s share price to benefit from a ramp-up in earnings as more liftboats and service rigs come onstream and demand is seen strong.
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