Despite its stock doubling year-to-date, “by peer comparison, comparison with its historical trading band and intrinsic valuation, Ezion still holds value,” CIMB says.
It views unlisted liftboat operator Seajacks International as the most relevant peer-comparison, with the two times it was acquired offering valuation benchmarks for Ezion; the 2010 acquisition of Seajacks at US$207 million ($254 million) valued it at 2.0x P/BV and 5.6x forward P/E, while the 2012 deal at US$850 million valued it at 4.3x P/BV and 15.2x forward P/E.
“The two suggest that Ezion is under-valued. Ezion is trading at 1.8x P/BV and 8.1x forward fully-diluted core P/E.”
It notes Ezion has a competitive advantage over Seajacks as it can build/design its liftboats 50%-55% cheaper. It adds, Ezion trades below its 9.4x and 2.0x three-year P/E and P/BV means respectively.
CIMB notes its target valuation only prices in 10 years of contracted life for liftboats and five years for service rigs vs economic lives of 20 and 10-15 years respectively, indicating large upside if Ezion re-contracts assets.
It trims its target to $1.64 from $1.65 after a provision for the latest service rig, but keeps an Outperform call. The stock is up 3.9% at $1.35.
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