Ezion

Ezion: OSK DMG sees opportunity to accumulate after the recent 14% drop from its peak due to concerns over the impact of rising interest rates on the group. House estimates net gearing will rise to 1.14x by end-FY13, but is not concerned as the borrowings are backed by steady cash inflow of c.USD1.6b from its liftboat and service rig chartering business. DMG see little downside risk given that house have not factored in new charters apart from the contracts already announced. DMG are projecting FY13/14/15F net profit of USD117m/USD200m/USD243m, primarily driven by charter contracts secured in the past three years. Based on the current pipeline of contracts, Ezion’s fleet is set to expand from 15 units in 1H13 to 26 units by 1H2015. DMG value Ezion based on 16x blended FY13/14F EPS, with potential re-rating to be driven by more charter contracts and increasing institutional shareholding profile. DMG maintains BUY rating with TP of $3.00.