Ezion banks on Chinese offshore windfarm market as oil and gas sector continues rough patch

Diversifying away from the sector is necessary, analysts say.

The offshore firm has marked its entry in the Chinese offshore windfarm market as it forms a joint venture with Sinotrans and CSC Holdings, forming Sinomarine & Teras Offshore Co.

According to a report by OCBC, the operating environment for the offshore oil and gas industry remains tough, making it necessary to diversify.

However, OCBC said time will still be needed for Ezion to completely diversify away from it.

“Given the protracted period of time required for recovery, we lower our P/B from 0.45x to 0.4x and at the same time roll over our valuations to FY16/17F book, such that our fair value estimate drops from S$0.55 to S$0.50,” OCBC said.

Meanwhile, Ezion has also proposed a renounceable underwritten rights issue of up to 487.3m new shares at an issue price of S$0.29 (~44% discount to closing price of S$0.52 on 30 Jun); this on the basis of three rights shares for every 10 existing ordinary shares.