Ezion Holdings reported a 24.5% YoY rise in revenue to US$94.9m and a 28.9% increase in net profit to US$49.2m in 3Q14, such that 9M14 net profit accounted for 73% and 68% of ours and the street’s full year estimates, respectively. Results were in line with our expectations.

The increase in revenue was mainly due to the chartering contribution from the deployment of additional units of liftboats and service rigs. Gross margin remained strong at 51.0% in 3Q14 vs 48.2% in 3Q13 and 51.1% in 2Q14.

Ezion expects more of its service rigs to be deployed in 4Q14 and is also looking for opportunities to make strategic acquisitions. Pending an analyst briefing later in the morning, we maintain our BUY rating but put our fair value estimate of S$2.31 under review.

Source: OCBC Research - 6 Nov 2014