Ezion

Ezion: UOB Kay Hian maintains Buy and Lifts TP to $2.00 from $1.87. Note that 3Q12 results within expectations and remains on track to meet forecast of US$80m for 2012. 3Q12 net profit was US$16.1m, up 24% yoy. This can be attributed to: a) contributions from one additional liftboat and a unit of service rig, and b) higher contributions from offshore logistic support vessel services with the commencement of the QCLNG project in Queensland, Aus. Expect new charter contract to enhance earnings by 7%. The additional two service rigs will raise Ezion’s fleet size to 19 units. House estimate an annual net profit contribution of US$10m for Ezion’s 50% stake or a 7% impact on 2013 and 2014 earnings forecasts. This earnings contribution is premised on charter revenue of US$42m per year, project cost of US$154m (30% equity and 70% debt), debt cost at 5% p.a. and a guided income tax rate of 5%. CIMB maintains Buy w $1.68 TP. Note that 3Q core earnings came in line with expectations. Like it did in the past three consecutive qtrs, Ezion announced contract wins. House particularly laud this latest project as it reflects management’s sharp business acumen. Overall, maintain Outperform with a higher target price, still based on a blend of P/E and P/BV. Catalysts could come from further contracts and earnings momentum.