Ezion

Ezion: Entered into an agreement to jointly market two service rigs built by Chinese SOE to support the offshore windfarm, oil & gas activities.

The Chinese SOE will provide the rigs, while Ezion will provide the technical expertise and operations and deployment of the two rigs, as well as the option to purchase the service rigs.

This is a follow-on from Ezion's plans to diversify its exposure away from the oil and gas sector to windfarm which supposedly has stronger demand due to China's plans to grow renewable energy sources.

Maybank-KE sees that this agreement is mutually beneficial for both parties in the following ways:
1) For the Chinese SOE: It probably has no takers for the service rig that it has constructed and yet has no expertise to operate it. Ezion could step in to help it market the rigs.
2) For Ezion: It has the opportunity to get new contracts without incurring capex. It could potentially get a foothold in the Chinese Windfarm market and not be totally under the mercy of oil and gas clients. It may also switch its vessels around for more efficient deployment.

However, at this stage, house sees this as just a collaborative agreement and no concrete projects or contract win have been announced yet. So unlikely to have much stock impact today given the current market.

Maybank-KE's last call on Ezion was a Buy with TP of $1.28.