Oct[2] - Ezion [Ride on the trend of oil]

COUNTER: Ezion Holdings Limited

OVERVIEW:
The counter specializes in the development, ownership and chartering of strategic offshore assets and the provision of offshore marine logistics and support services to the offshore oil and gas industries. It owns one of the largest and most sophisticated class of liftboats in the world. The liftboats are mainly used for well-servicing, commissioning, maintenance of offshore platforms. Other offshore assets are:

HIGHLIGHTS:
[1] The counter has been delivering excellent results over past few years. Its EPS (earning per share) jumped from 0.051to 0.162 on 2014. Revenue contribution was diversified across geographical market. In FY2014, the contribution by Singapore, Australia, rest of Asia and Europe amounted to 6.4%, 14.5%, 38.9% and 33.4% respectively. Total revenue was ~USD360m.

[2] Due to plummeting of oil price, oil companies shift focus to maintain oil production from existing oilfield. This will involve repair and maintenance of existing production platforms. Liftboats and service rigs provide accommodation and deck space during platform maintenance. For the counter, four of five expiring contracts has been renewed. Operational vessels are 99% utilized.

[3] Recent $120m bond issue at 3.65% provides enough funding for the counter to cater higher operation cost and new project requirement.

INVESTMENT THEMES:
[1] Similar to other oil related counters, it has been experiencing heavy down falling in share price since 2H2014. Current shares price represents P/B (price to book) ~ 0.638 and P/E (price to earning) ~ 3.8x. The counter is trading with heavy discount now.

[2] A meeting is scheduled among OPEC (Organisation of Petroleum Exporting Countries) and non OPEC countries on 21 Oct. Market speculates that oil output from OPEC could be cut. As a result,  crude oil has been edging upwards even higher supply has been flooding the market.

[3] Recently, the counter price movement has been imitating oil price. It has been testing 0.74 three times. Shall price breaks up 0.74, it is forming a triple top break up. Higher price could be expected. Buyer has been rising significantly as well. Short term trader could take the opportunity.

[4] For investor who is long term bullish on oil price, the counter is one of the highly recommended proxies. It has been the favorite among research firms because of its healthy finance book as well as project visibility. General rating price is >1.

ENTRY PRICE:
Buy ~ 0.74.