Ezion

Ezion: There is more activity in Ezion’s SGX-listed associates recently. 41.5%-owned Charisma Energy has announced several contracts recently, and there have been senior management changes in both Charisma and another associate, JK Tech. Currently, both companies are still at their early stages of development, and OCBC has not factored Ezion’s stakes in these companies in its fair value estimate. In the longer term, however, there is potential growth if 1) Ezion continues to refer non-core energy-related business introduced by existing clients to these associates and 2) there is good execution by the management teams of the respective companies. Meanwhile, post Ezion’s bonus issue of shares, OCBC’s value estimate drops from S$2.78 to S$2.31 (based on 12x blended FY14/15F earnings). OCBC maintains Buy with 26% upside potential.