Thursday, August 21, 2014
Ezion: Nomura initiating coverage at Buy with TP $3.13. Believe the Street is overestimating Ezion’s minority interest and tax expenses, while underestimating its revenue outlook. Expect Ezion's liftboats / service rigs in Southeast Asia to increasingly thrive on: 1) the growing recognition among national oil companies that oil & gas production can be improved via more frequent oil field maintenance work, and 2) the use of liftboats /service rigs, which are more efficient and safer choices vs the offshore floating vessels currently used to service fixed production platforms. Ezion’s fleet is also backed by secured charter-out contracts from oil majors, and will anchor the 36% recurring earnings CAGR over the next three years. Separately, the Commonwealth Bank of Australia has emerged as a substantial shareholder in Ezion via the purchase of shares for its client funds. Possibly, there could be interests by some Australian funds in the counter.