Ezion

Ezion: Broadly, CLSA still is convicted on Ezion’s growth story. A recent Douglas Westwood study indicates healthy demand for liftboats/service rigs over the medium term with annual growth rate of 5-6%in vessel days. CLSA guides GMS (closest pureplay to Ezion) and Hercules are two largest competitors that have indicated aggressive plans to grow the liftboat fleet while a few smaller players have also emerged in the market. Additionally, channel checks suggest that more liftboats are being built on a speculative basis in Asia. This indicates acceptance, but on an absolute basis, current number of new liftboats in the market is still too small to adversely impact dayrates and itilisation. Fleet expansion should stabilize post FY15, and this expansion backed by long term charters will continue to be key driver. CLSA forecasts a 5% dilution in FY14 to fund more growth. CLSA maintains Buy with TP $2.11.