EZION_HOLDINGS(EZI.SP):PREPARE_FOR_MORE_CONTRACT_WINS_AHEAD-2012-09-20.pdf
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1、SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Company Update 20 September 2012 Singapore Co. Reg No: 198700034E MICA (P): 099/03/2012 Ezion Holdings Prepare for more contract wins ahead TP raised, reiterate BUY. Following our last BUY call after its 2Q12 results, Ezions stock p
2、rice momentum has accelerated with a 29% gain. We believe that the market is starting to realise its earnings growth potential. We are upgrading our target price to SGD1.66, ahead of potential contract wins, which we believe would be positive stock price triggers. Reiterate BUY. Fund-raising heralds
3、 new contracts ahead. Ezion recently completed an issuance of SGD125m 7.8% perpetual securities. Over the past year, Ezions contract announcements were often preceded by some fund-raising exercises. We believe that the current issuance could be a sign for more contract wins ahead. While it would be
4、hard to guess what kind of contracts Ezion would secure, we postulate that incremental net profit potential could be up to USD3-7m per unit of service rig contract and USD6.5-7.5m per unit of super liftboat contract. High cost of perpetuals not a concern. At 7.8%, the cost of funding may appear rela
5、tively high compared to the previous bond issue which was at 5.25%. However, given Ezions high ROEs for its projects (typically30%), we see no cause for concern. Moreover, yearly distribution for the perpetuals would only amount to SGD9.75m which Ezion should be able to support comfortably as we exp
6、ect it to turn free cashflow positive from FY14F. Forgotten marine supply bases. Ezions marine supply base business has often been forgotten. As offshore activities turn more prolific in Australia, Ezions marine supply bases could be a force to be reckoned with. Its two marine supply bases are strat
7、egically located in Western and Northern Australia, in close proximity to offshore projects in the area. We have not accounted for this in our forecasts. TP raised to SGD1.66. Reiterate BUY on Ezion with target price raised to SGD1.66, pegged to 9.5x diluted FY13F PER. We switch from PEG to PER meth
8、odology for easier comparison among offshore and no part of the research analysts compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. Reminder Structured securities are complex instruments, typically involve a high degree
9、 of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward in
10、terest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the
11、risks involved in making such a purchase. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE. Stephanie Wong | CEO, Maybank Kim Eng Research Definition of Ratings Maybank Kim Eng Research uses the following rat
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