Ezion - Cash equaling 30% of market

S$139mn cash waiting to be deployed by October 2010
We retain our Buy rating on Ezion, with an unchanged S$0.93 PO. We estimate
Ezion to have S$139mn cash by October 2010, equivalent to 30% of its current
market cap. This, in our view, puts the group in a strong financial position to bid
for new offshore logistics projects in Australia, and to build more liftboats.
Expect S$20-42mn cash for potential contracts in Australia

We expect Ezion to utilize S$20-42mn of its cash pile to bid for contracts related
to offshore gas fields in North and Northwest Australia, using the group’s previous
investment in Gorgon Phase 1 as a gauge. The orders could come from Chevronled
Wheatstone and Gorgon Phase 2 projects, Esso-led Scarborough project, or
BHP Billiton’s Macedon project in Australia. The S$3.1-6.6mn accretive net profits
from these potential projects are not yet factored into our earnings forecasts.
Liftboat projects may require S$24-49mn cash investment.

We expect Ezion to announce plans for either 1-2 maintenance or 1 installation
liftboat in 4Q10, following its receipt of S$36mn in net cash by October, from an
earlier sale of a liftboat. Our earnings model has only factored in the building of
one maintenance liftboat, which requires an equity investment of about S$24mn.
There are upsides to our earnings estimates in FY12-13 should Ezion build the
higher value installation liftboat, or two maintenance liftboats (see Page 3).
To deploy S$33mn in cash for recently secured projects.

We estimate Ezion will use S$33mn of net cash proceeds on three contracts
secured from mid-July to mid-August. These projects are the Phase 1
constructions of Exmouth Marine Supply Base and Melville Island Marine Supply
Base, and the building of a pair of landing crafts or tug and barge for marine
logistics works. The incremental earnings are not yet in our earnings model.