Ezion went ex-bonus yesterday, triggering what resembled a 15% share price  fall.  Adjusting  for  the  1-for-5  bonus,  the  ex-bonus  price  should have  been  SGD1.83,  ie  in  reality  the  stock  gained  1.7%.  We  continue liking  Ezion  for  its  50%  top-in-class  FY14F/FY15F  recurring  net  profit growth  and  focus  on  its  doubly  recession-proof  shallow  water maintenance  operations  that  should  continue  yielding  sturdy  doubledigit growth. Maintain BUY, with a SGD2.50 TP (vs SGD3.00). 

1-for-5  bonus  issue.  Ezion's  share  price  was  SGD2.20  as  at  last Friday's  close  (5  Sept).  After  adjusting  for  its  1-for-5  bonus  issue,  the theoretical  ex-bonus  price  should  have  been  SGD1.83.  While,  at  first glance,  Ezion's  "plunged"  15%  yesterday,  in  reality  the  stock  actually gained 1.7%. 

Top-in-class  annual  growth of 50%.  With locked-in charters over the next few years,  we see Ezion delivering 50%  recurring earnings  growth per  year  for  FY14/FY15  each.  This  marks  its  highest  growth  in  the offshore sector.  Beyond FY16, growth would  depend on securing new service  rig  contracts,  of  which  we  are  confident  that  management  can deliver. 

Doubly  recession-proof.  We  see  the  shallow  water  space  as  being recession-proof,  as  production  from  this  segment  will  need  to continue even in the worst-case scenario of a 10% fall in  global  oil demand. This was highlighted in our  Shallow Water Is The New Onshore  report  dated 28 May. Further to this, the long-term recurring nature of maintenance work,  being  part  of  operating  expenditure,  is  also  recession-resilient. Ezion's core business is, thus, doubly recession-proof.  

Maintain  BUY  with  SGD2.50  TP  (from  SGD3.00).  Ezion  remains  our Top Pick in the offshore and marine space. We continue to like this stock for its:  i) strong 50%  recurring net profit  growth for a couple of years  at10x P/E,  ii) recession-proof strategy,  and iii) lack of serious competitors in the  Asia-Pacific  space.  Maintain BUY with  an  adjusted  SGD2.50 TP post bonus issue.

Source: OSK-DMG