Ezion

Ezion: CLSA trims FY14-16 earnings by 3-6%, to factor in significant project delays announced in the recent 1Q14 results. This resulted in a lower TP of $2.82, while house maintains its conviction Buy rating on the counter. Four additional projects are facing significant delays of over 4-6 months. Most notable is a 4 months delay as well as additional US$10m capex in the Caspian Sea contract which is incidentally Ezion’s largest project. Unit 24 (North sea class vessel) has also been delayed by around 4 months but the company expects to soon find a charter in North Sea rather than deploying it in South east Asia as originally planned. House analysis indicates that Ezion is currently trading close to the NAV of its existing fleet and thus any future fleet growth is not priced in. CLSA notes that the stock is extremely cheap on PER basis of 7.6x F15 PER.