Currently, Ezion derives the bulk of its earnings from ballastable vessels, which serve as support vessels for offshore projects. Going forward, earnings will be boosted significantly by the addition of 4 self-propelled jack-up support rigs (aka liftboats) to its fleet of vessels.
Ezion also recently won an A$350m contract for early-stage work in the development of Western Australia’s massive Gorgon natural gas project. We anticipate more jobs to come from this project, which has an estimated capex of at least US$28bn.
Ezion’s share price has moved up sharply on the back of positive news flow such as the Gorgon contract win. However, we believe its prospects have not yet been fully reflected in its share price. Despite FY09 valuations of 35.9x, PE to Growth is still just at 0.33x. We expect further 28% upside to our target of S$0.99, which is based on 15x FY10 earnings.
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