Ezion

Ezion: UOB Kay Hian hosted co. in a recent roadshow in KL and maintains Buy with $1.28 TP. Mgt upbeat on demand for liftboats and service rigs, with strong demand witnessed in ASEAN, Middle East, West Africa and the Gulf of Mexico. So far, only two liftboats have been deployed to ASEAN. Being an ASEAN-based co, Ezion intends to raise its profile in the region.

Ezion is shifting to time charter (TC) from bareboat charter as there is more profit to be made in TC contract vs a bareboat charter. Australia also offers plenty of opportunities for Ezion, with Ezion winning an Eastern Australia US$55m LNG logistics contract to handle LNG logistics off, Queensland.

All equity and debt funding has been secured for Ezion’s existing 13 liftboat/service rig projects. Ezion expects to maintain its long-term net gearing at 40%. While this can spike up temporarily, future strong project cash flows will quickly reduce it to the long-term targeted ratio.

Overall, note that Ezion’s recent $94.6m share placement has positioned it for more projects. Guided by a min ROE of 30%, expect new projects to be EPS-accretive.