Ezion

Ezion: Standard Chartered calls Ezion best in class and significantly undervalued and initiates an ACT call to buy the stock on solid fundamentals and compelling valuations: (1) high-end liftboat day rates have risen more than 30% y/y, based on recent channel checks, (2) Ezion’s backlog has grown 15% to US$ 2.1b in the past six months and (3) valuations are at the low end of the sector’s 9.0-19.0x PER range despite the best growth, margins and ROE in the sector. StanChart’s deepdive analysis into peers shows that Ezion’s liftboats are far superior and are customised to operate in the most attractive regions. Stanchart also highlights the catalysts: 1) good 3Q13 results (14 Nov) of US$38m with y/y growth of 130%, 2) deal flow on the second generation liftboat, which could generate profits up to 50% higher, 3) rising high-end liftboat day rates that play on Ezion’s strength, given its premium fleet. The house also adds that 88% of 2014E earnings are ‘in the bag’, likewise for 77% of 2015E earnings from secured contracts. Finally, StanChart says Asian liftboat demand may grow 600% and believes Ezion is the No.1 liftboat owner in Southeast Asia, with an estimated share of over 60%. Stanchart's rating on Ezion is Outperform with TP $2.70