Ezion

Ezion: Daiwa initiates coverage with Buy Call and $3.01 TP. House note that over the next 3-5 yrs, regions such as the Middle East and Asia Pacific are set to see a substantial increase in offshore developments and a rise in the number of offshore fields moving into production. These developments should spur demand for: 1) offshore construction services and support, 2) well-intervention (ie, processes to enhance oil wells’ production rates) services, 3) offshore-infrastructure maintenance/repair, and 4) decommissioning services. Liftboats support all these activities, and given their cost and safety advantages, the demand and adoption rate of them in Asia should increase significantly. Housee believe Ezion will be able to capitalise on this demand in the South East Asia region; forecast an EPS CAGR of 54% for the company over 2012-15. Over the next 6-12 months, expect Ezion to maintain its momentum seen so far this year in winning liftboat/service-rig contracts, and to continue to expand its fleet size. House Target P/E is 1SD above Ezion’s average forward PER of 11.3x since 2009. House consider a 13.8x target multiple as appropriate, as it is still below the average 2013E PER of its peers globally of around 16x, and as Ezion is still in the middle of a period of robust demand for liftboats in the Middle East and Asia Pacific.