Ezion

Ezion: CIMB Maintains OutPerform with $1.64 TP. House note that backed by robust orders, Ezion’s stock has rallied 100% YTD. Despite this sharp re-rating, we believe it continues to offer value, from relative and intrinsic valuation perspectives, as see clear catalysts from liftboat/service-rig additions. House trim FY14 EPS by 2% to factor in a US$3m provision for its latest service rig 18 (to be deployed in the Caspian Sea). Otherwise, maintain Outperform based on blended P/E and P/BV valuations. Add that by peer comparison, comparison with its historical trading band and intrinsic valuation, Ezion still holds value. In house view, privately-held Seajacks International (pure liftboat operator) is the most relevant peer for comparison. What makes Seajacks interesting is that it was acquired twice, with the two transactions offering benchmarks for valuing Ezion. The first US$207m transaction (Jan 10) valued Seajacks at 2.0x P/BV and 5.6x forward P/E. The second US$850m transaction (Mar 12) valued Seajacks at 4.3x P/BV and 15.2x forward P/E. The two suggest that Ezion is under-valued. Ezion is trading at 1.8x P/BV and 8.1x forward fully-diluted core P/E.