Here’s why a takeover may be on the cards for Ezion

It’s incredibly cheap and attractive.

Offshore support services provider Ezion is a prime takeover target for companies looking to take advantage of the current oil price downturn, according to a report by DBS.

DBS noted that Ezion is particularly attractive because of its cheap valuation, which currently stands at just 0.5x of its price-to-book value.

Potential acquirers might also be drawn to Ezion because it provides immediate access into new market segments, thanks to its first-mover advantage in Asia and its sizeable fleet of 37 service rigs.

Although Ezion appears to be uncomfortable saddled with debt--its net gearing stands at slightly above 1x--DBS notes that Ezion’s debt is backed by 3-5 years’ long-term charter contracts worth over US$2 billion. This provides over three times revenue coverage.

“Potential buyers could be existing international liftboat players, or asset owners in the offshore support vessel space that would like to gain fast access to the service rigs business in Asia to complement their geographical reach or product offerings,” said DBS.

Ezion's net profit fell 38.4% to US$30.3m in the third quarter.