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Wednesday, June 13, 2012

Maybank Kim Eng raises Ezion target

Written by The Edge   
Tuesday, 12 June 2012 12:05

Maybank Kim Eng raised its target price on Ezion Holdings to $1.38 from $1.35, while keeping its ‘buy’ rating, after the oil and gas services firm won a US$86.3 million ($111 million) service rig contract.

Ezion shares were down 1.9% at $0.795, underperforming the 0.8% drop in the FT ST Small cap Index. The stock has risen about 20% so far this year.
Maybank raised its net profit forecasts for Ezion’s 2013-2014 fiscal years by about 5% to factor in the firm’s new contract, believed to be from Mexico’s Pemex. The broker estimated the project would add US$7 million per annum to Ezion’s net profit over the 2013-2016 fiscal years.

Ezion is also gunning for a third Australian liquefied natural gas marine logistics contract and the tender results are likely to be known by next month, Maybank said.

While Ezion’s gearing is set to rise to fulfill the estimated capital expenditure of US$450 million this year, Maybank said the strain on the balance sheet should ease as operating cash flows increase on the deployment of its units.

The broker said Ezion was the cheapest offshore and marine stock under its coverage, while offering one of the strongest earnings growth potential at a 33% compound annual growth rate over the next three years.

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