Ezion

Ezion: DBSV reiterates Conviction BUY with TP $3.26 (52% upside). Says stock is undervalued at 8x PE, with a promising 2-year EPS CAGR of 48% that is backed by firm charter contracts of US$1.9b (4x revenue coverage), and an astounding ROE of 27%. Ezion’s first mover advantage is expected to sustain in the medium term. Competition concern is unfounded as the industry is in early phase of growth stage. Ezion also has the potential to unlock value through takeover offer or securitisation of fleet. Separately Ezion also announced that it is proposing to acquire a 29.81% stake in JK Tech. Ezion has proposed to subscribe 42m new shares (29.8%) in JK Tech at an issue price of $0.09 per share. In addition, Ezion also has the option to acquire additional 260m shares at the same price, which may lift Ezion’s shareholding to 64.8%. The consideration of $3.78m will be satisfied by the issuance of 1.8m new shares in Ezion at an issue price of S$2.0445 per Ezion share. JK Tech was engaged in the provision of IT products and services. Post the exercise, JK Tech will diversify into exploration, exploitation and production of oil and gas ("E&P Business"), which shall be complementary to Ezion’s existing business. As of now, the transaction is not material. Transaction value is small at only 0.15% of Ezion’s current market cap. The share cap increase is only marginal at 0.15%.