Ezion

Ezion: CLSA has a high conviction BUY rating with TP of $3.10. A combination of strong earnings growth, secure cashflow will drive a rerating, which could double the share price in three years. As a leader in the high-spec liftboat industry, Ezion benefits from favourable supply-demand dynamics and limited competition. CLSA forecast a 63% core-net profit Cagr over 2012-15, average ROE of 25%, implying the stock is attractively valued at 9.1x 14CL PE and 2.0x PB. Ezion enjoys first-mover advantage in the high-spec liftboat market, which translates into strong demand and limited competition. At current day rates, cash payback on Ezion’s assets is about four years while the life of a new-built liftboat can be 25-30 years and refurbished rigs can last 10-15 years. Furthermore, the long-term nature of the contracts ensures full fleet utilisation.