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Please refer to the important disclosures at the back of this document.

Enters into JV to provide jack-up rig. Ezion Holdings (Ezion)

announced that it has signed a JV agreement with Buccaneer

Energy Ltd (Buccaneer) for the joint ownership of a jack-up rig

with the Alaska Industrial Development and Export Authority

(AIDEA). Ezion will acquire a 50% interest in Kenai Offshore

Ventures (the JV) and its US$2.5m outlay will be funded through

internal resources. We are, however, assuming a totalinvestment of US$5m for Ezion as there may be additional

project costs.

Backed by US$109.5m contract. Kenai Offshore has secured

a contract worth US$109.5m to provide a jack-up rig to support

the offshore oil and gas activities in the Cook Inlet in Alaska

for five years, and is expected to commence before end FY11.

This translates to a bareboat charter rate of about US$60,000/

day. The unit can only operate in water depth of up to 300ft

(shallow waters), hence we were not expecting the higher

charter rates that higher-spec units generally command.

Supported by AIDEA. The project has obtained the approvalof the state of Alaska, which is keen on this development as

the main area around the Cook Inlet (including Anchorage)

may face a natural gas shortage as early as 2012. According

to Buccaneer's announcement, the incentives legislated by

the State of Alaska to incentivize operators to drill with a jack-

up rig were a significant factor for the business case. AIDEA

will now commence final negotiations for acquisition of the

rig, and begin modifications and upgrades before transporting

the rig to Cook Inlet middle of this year. We understand that

besides the joint ownership of the jack-up rig, Ezion will also

provide expertise in the upgrades and mobilization of the unit.

Upgrading work is likely to be done in one of the yards inSingapore.

Maintain BUY. Taking into account interest cost, depreciation,

rig maintenance and preferred dividends to AIDEA, we estimate

the earnings contribution to Ezion in the rig's first year of

operations (FY12) would be around US$2.89m, translating into

an ROI of 57.8% for Ezion. Though we increase our FY12

earnings estimate by 3.7%, our fair value estimate of S$0.79

remains unchanged as valuation is based on 11x FY11 core

earnings. Meanwhile, this latest development also allows Ezion

to enter the Alaskan oil and gas scene, and there may be

opportunities for it to provide offshore support vessels in the

area in the future. Maintain BUY.

Ezion Holdings Ltd

SINGAPORE Company Update Results MITA No. 010/06/2009

7 April 2011

Maintain

BUY

Current Price: S$0.705Fair Value: S$0.79

SINGAPORE Company Update MITA No. 010/06/2010

Reuters Code EZHL.SI

ISIN Code 5ME

Bloomberg Code EZI SP

Issued Capital (m) 714

Mkt Cap (S$m / US$m) 504 / 400

Major Shareholders

Chew Thiam Keng 24.1%

Ezra Holdings 14.0%

Free Float (%) 55.7%

Daily Vol 3-mth (000) 3,594

52 Wk Range 0.550 - 0.815

Going into Alaska

Low Pei Han(65) 6531 9813e-mail: LowPH@ocbc-research.com

Previous Rating: BUY

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STI

Ezion

(S$ m) FY09 FY10 FY11F FY12FRevenue 73.6 151.2 152.5 211.2

EBITDA 28.9 49.5 56.7 88.9

P/NTA (x) 2.8 1.9 1.5 1.3

EPS (cts) 2.4 7.3 9.0 10.1

PER (x) 29.4 9.7 7.8 7.0

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P age 2 7 Ap r i l 2011

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Exhibit 1: Structure given by Buccaneer Energy; JV partner refers to Ezion

Source: Buccaneer Energy

Exhibit 2: Financing structure

Source: Company, OIR

Financing structure

Entity Amount (US$m)

Bank 50-55

AIDEA 30

Shareholders 5 to 10

Ezion's portion 5 (estimated)

More about the potential natural gas shortage. The main area around

the Cook Inlet (including Anchorage) may face a natural gas shortage asearly as 2012 and importing natural gas is currently not regarded as an

economically attractive solution. Building a pipeline from the North Slope

to the main population centres in the south is also not considered

economically viable currently with environmental, commercial and timing

issues. According to an announcement by Buccaneer in Nov 2010, natural

gas trades sold via contract to local utilities had a floor of US$7/mcf and a

cap of US$10/mcf then. This is significantly higher than the spot price of

about US$4/mcf in the Lower 48 states.

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P age 3 7 Apr i l 2011

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Exhibit 3: Project economics in the first year (US$m)

Source: Company, OIR estimates

Project economics (US$m)Revenue 22

Less: Costs

Depreciation 9

Interest cost 2.75

Maintenance of rig 1.50

Pref div to AIDEA 2.40

Pre-tax 6.35

Tax 0.57

After-tax 5.78

Ezion's share 2.89

Ezion's Key Financial Data

EARNINGS FORECAST BALANCE SHEET

Year Ended 31 Dec (S$m) FY09 FY10 FY11F FY12F As at 31 Dec (S$m) FY09 FY10 FY11F FY12F

Revenue 73.6 151.2 152.5 211.2 Cash and cash equivalents 40.3 97.5 72.8 59.2

Gross profit 29.3 57.7 76.2 105.6 Other current assets 28.9 40.3 39.6 54.9

EBITDA 28.9 49.5 56.7 88.9 Property, plant, and equipment 260.1 194.8 414.2 495.6

Net finance expense -2.2 -2.8 -4.8 -5.2 Total assets 364.7 513.0 641.2 744.5

Share of results of JVs, net 2.4 8.8 14.5 17.4 Debt 155.7 168.6 220.0 220.0

Exceptionals -2.5 12.1 14.0 0.0 Current liabilities excluding debt 28.7 70.8 69.3 94.5

Profit before tax 18.1 55.8 71.6 82.4 Total liabilities 187.1 241.9 292.4 318.2

Minority interests 0.0 0.0 0.0 0.0 Shareholders equity 177.6 271.1 348.9 426.3

Profit attributable to shareholders 17.1 51.9 67.1 77.8 Total equity 177.6 271.1 348.9 427.3

Core net profit 19.6 39.8 53.1 77.8 Total equity and liabilities 364.7 513.0 641.2 744.5

CASH FLOW

Year Ended 31 Dec (S$m) FY09 FY10 FY11F FY12F KEY RATES & RATIOS FY09 FY10 FY11F FY12F

Op profit before working cap. changes 30.5 53.3 57.3 88.3 Core EPS (S cents) 2.8 5.6 7.1 10.1

Working cap, taxes and int -20.4 4.2 7.4 1.7 EPS (S cents) 2.4 7.3 9.0 10.1

Net cash from operations 10.1 57.5 64.7 90.0 NTA per share (S cents) 24.9 38.0 47.0 55.3

Purchase of PP&E -126.6 -149.5 -100.0 -100.0 Net profit margin (%) 23.3 34.3 44.0 36.9

Other investing flows -9.6 17.0 -35.4 2.3 PER (x) 29.4 9.7 7.8 7.0

Investing cash flow -136.2 -132.5 -135.4 -97.7 Price/NTA (x) 2.8 1.9 1.5 1.3

Financing cash flow 126.6 120.7 41.1 -10.8 EV/EBITDA (x) 17.4 10.2 8.9 5.7

Net cash flow 0.4 45.8 -29.6 -18.4 Dividend yield (%) 0.1 0.1 0.1 0.1

Cash at beginning of year 34.7 40.3 97.5 72.8 ROE (%) 9.6 19.2 19.2 18.3

Cash at end of year (incl pledges) 40.3 97.5 72.8 59.2 Net gearing (%) 65.0 26.2 42.2 37.7

Source: Company data, OIR estimates

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For OCBC Investment Research Pte Ltd

Carmen LeeHead of ResearchPublished by OCBC Investment Research Pte Ltd

SHAREHOLDING DECLARATION:The analyst/analysts who wrote this report holds NIL shares in the above security.

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