Ezion

Ezion: 3Q14 results were broadly in line with bullish estimates, with net profit up 29.5% to US$49.5m taking 9M14 net profit to US$140.0m (+16.1%). Revenue advanced 24.5% to US$94.9m, led by chartering contributions from the deployment of additional units of the group's liftboat and service rigs, while gross margin improved to 51.0% from 48.2%. Bottom-line was aided partially by a 204.2% rise in other income to US$5.9m, due to higher FX gain and fees charged to JVs. This was partially offset by a 30% decline in associate and JV contributions at US$5.7m, mainly due to the acquisition of the remaining issued share capital of jointly controlled entities and becoming fully owned subsidiaries of the group. Going forward, Ezion guides that despite the recent weakness in the prices of fossil fuel, the group continues to observe the requirement on assets and services related to platform and well related works in the Group's existing market, and will continue to focus its effort on growing its Service Rig division. With the successful restructuring of its port and marine supply base business in Australia with AusGroup, the group will have a strengthened balance sheet and management focus to further grow its Service Rig business. Ezion expects more of its service rigs to be deployed in 4Q14 and will be on the lookout for opportunity to make strategic acquisition to further enhance its business. At the current price, the group trades at 8.8x forward P/E and 1.7x P/B.