SINGAPORE (July 1): UOB is keeping its “hold” call for Ezion Holdings with a target price of 60 cents following the company’s formal entry into the China offshore windfarm market and an announcement of a rights issue.

(See Ezion proposes rights issue to raise up to $137.5 mil in net proceeds; enters windfarm market)

The announcement of Ezion's entry into the Chinese windfarm market serves only as a formality, given that the market was already aware of the development, says UOB analyst Foo Zhiwei, lead analyst for the Friday report

The deployment of two service rigs is (also) consistent with management guidance and has already been factored into our earnings, adds Foo.

Ezion also announced it is in the midst of a rights issue to raise net proceeds of $135.0-137.5 million, with each rights share priced at 29 cents. Proceeds of the rights issue will be used for potential acquisition of new offshore and marine assets, as well as potential upgrading and modification of existing offshore and marine assets, says Foo.

The rights issue however comes as a surprise to the research house, given Ezion's stronger financial position and cash generating abilities relative to its peers.

“We're mildly concerned about the fact that one of the stronger player in the Singapore offshore marine sector has decided to go with equity raising over debt, as it sets a precedent and might spark a round of equity raising from its beleaguered peers,” Foo adds.

As at 11.40am, Ezion shares are down 9.6% at 47 cents.