DBSVickers Report - 05 Dec 2007

Ezra Holding Going deeper

Story: We visited Ezra last week. With its well diversified fleet, Ezra is a beneficiary across various segments of the oil and gas chain. More importantly, it is well positioned to support the expected higher level of E&P activities in deeper waters.

Point: Ezra has a strong growth profile going forward, underpinned by eight vessel deliveries in FY08, three in FY09 and a further four in FY10 and rising rates especially for vessels with deepwater capabilities.

Relevance: Ezra’s growth is well mapped out till 2010. We expect net earnings to rise 70% in FY08 and 76% in FY09. Ezra will also recognize an exceptional gain of around S$200m arising from the disposal of 39% in EOC (to 48.9%) following its listing on the Oslo Bors. Saigon Shipyard is expected to be fully operational by 2009, which should pave the way for more fabrication, installation and commissioning projects. Maintain Buy with a target price of S$4.00 based on 15x chartering and 20x for EOC on FY09 earnings.