Ezion Holdings

UOBKayhian 4 Sep 2014

FY14F PE (x): 10.8
FY15F PE (x): 8.9
Malaysian beckons. Management sees continued strong demand for liftboats in Asia
Pacific and the Middle East. In particular, Malaysia will be the single largest potential
market for liftboats in the next five years, given the country’s plan to activate marginal
fields, which are expected to be the largest in the region. In Petronas’ 2012 annual
report, the national oil company stated that 80% of Malaysia’s oilfields are technically
suitable for enhanced oil recovery, based on initial screening studies. The application
of EOR could boost the recovery factor to more than 40% and the fields’ life could be
extended to beyond 2040. Separately, India will be an important market in the medium
term as it is imperative for the country to step up domestic oil production to stem rising
oil imports. The situation there is somewhat similar to what Indonesia has experienced.
Fleet to double by 2016. As of mid-14, Ezion's fleet stood at 18 vessels (excluding unit
no. 2 which was sold) with 18 more vessels to be delivered between mid-14 and 3Q16.
All in all, Ezion has a fleet of 36 vessels.
Maintain BUY and target price of S$2.62, based on 11x 2015F PE, or a 15% premium
to the long-term (2004 to current) 1-year forward PE mean of 9.5x for OSV-owner
segment of the oilfield services sector.