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DBS Group Research 2015-07-07: Ezion Proposed to acquire 30% stake in Rotating Offshore Solutions Pte Ltd. Maintain BUY.

  • Ezion has proposed to acquire 30% stake in Rotating Offshore Solutions Pte Ltd (ROS), a Singapore-based marine engineering solution provider specialized in the O&G production related segment. 
  • Key products for ROS comprise the FPSO topside equipment modules such as Oil Separation/Stabilization Modules, Fuel Gas Compression Modules, Gas Lift and Injection Compression Modules. 
  • Ezion will subscribe 321,429 shares in ROS for an aggregate consideration of S$18m. 
  • This represents a 1.2x NTA and 6.9x FY15 PE (FYE Mar), a tad higher than Ezion’s < 1x NTA and 6.0x FY14 PE (FYE Dec). 
  • In return, Ezion will issue ROS 17.5m new shares in Ezion @ S$1.0287. ROS’s existing business is complementary to Ezion’s. 
  • It will create synergies to better support Ezion’s customers on their production support related activities in the offshore O&G industry. 
  • It will also place the two entities in a stronger position to compete with competitors and explore new growth opportunities. 
  • Maintain BUY on Ezion and TP of S$1.50 (8x FY15 PE). 
  • The financial impact is immaterial.

(Yeo Kee Yan, Ling Lee Keng)

Source: http://www.dbsvickers.com/




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