Ezion

Ezion: Nomura maintaining its Buy call and raising its TP to $2.67. Believe that the market’s revived concerns on the threat of rising USD and interest rates to Ezion’s profits are again overplayed USD is Ezion’s reporting currency and its dominant transactional currency, vs its SGD share price. Hence, a rising USD against SGD lowers the P/E valuation for the stock, and is positive for investors. Investors are buying into the sweet spot in Ezion’s growth potential in FY14-16F – as the house expect net debt to decline, free cash flows (FCF) to improve, ROE to stay above 21%, and core EPS to see 36% 3-year CAGR. The impact of a sharp interest rate increase is manageable for Ezion given 70% of its floating rate exposure is hedged.