Swiber Holdings – Singapore

BUY

(Maintained)

Company Update

Share Price S$0.995

Target Price S$1.54

Upside +54.8%

Company Description

Swiber Holdings is a regional oilfield services

and offshore construction group

Stock Data

GICS sector Energy

Bloomberg ticker: SWIB SP

Shares issued (m): 508.4

Market cap (S$m): 505.8

Market cap (US$m): 371.0

3-mth avg daily t'over (US$m): 4.8

Price Performance (%)

52-week high/low S$1.25/S$0.815

1mth 3mth 6mth 1yr YTD

(2.5) (8.7) (7.0) 2.6 (2.5)

Major Shareholders %

Pang Yoke Ming 10.8

Goh Kim Teck 9.4

Jean Pers 6.1

Yeo Chee Neng 6.0

FY10 NAV/Share (US$) 0.66

FY10 Net Debt/Share (US$) 0.64

Price Chart

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VolumeSWIBER HOLDINGS LTD Swiber Holdings Ltd/FSSTI Index (%)

Source: Bloomberg

Analysts

Nancy Wei

+65 6590 6628

nancy.wei@uobkayhian.com

Stella Tan

+65 6590 6629

stellatan@uobkayhian.com

Contract awards shifting to a higher gear

What’s New

•

US$10m from the sale of two vessels, this was offset by one-off losses:

a) US$2.3m fair value loss on bonds and b) US$1.1m loss on the

dilution of PT Swiber Berjaya as Swiber did not participate in its share

issue. Separately, associates contributions were close to zero vs

S$1.9m profit contribution previously due to the high operation

expenditure at the initial stage of operation of a JV in Thailand.2Q10: While Swiber Holdings (Swiber) booked in a large gain of

•

expansion. Administrative staff head-count increased by 30% and

business development was beefed up. Swiber is bidding for more

contracts in India and set up a new office in UAE.Administrative expenses in 2Q10 were 21% yoy higher due to business

•

Swiber and does not include its consortium partners’ shares.

Furthermore, Swiber’s current orderbook does not include contract

extension from Brunei Shell Petroleum for offshore installation work to

be carried out in 2011-16 as the contract value has not been finalised.

As the contract for 2010 is worth US$81.4m – which is included in

current orderbook – we estimate the contract for 2011-16 could be

worth about US$500m.Orderbook currently stands at US$915m. All of it is attributable to

•

markets. Given the close proximity between India and Middle East, the

same fleet can be deployed to these regions, thus achieving greater

efficiency on lower mobilisation and demobilisation costs.

- India: Of the four recent bids by Swiber, the Group won three. It is

very active bidding for subsea work as well the usual offshore

platform installation and pipe-laying projects. Expect Inspection,

Repair and Maintenance (IRM) jobs to follow.

- Middle East: Swiber has offices in UAE and Saudi Arabia. JVs are

beginning the bear fruits. Swiber is bidding for one job in UAE and two

in Saudi Arabia. The Group has been invited by Saudi Aramco to bid

(after it qualified for bidding) on a project which will require 600km of

pipeline and 14 platforms over 3-4 years.

- Vietnam: Swiber is moving aggressively in anticipation of large

projects of field development with long pipelines to be awarded.Contract bids: Management sees strong contract awards in most

Key Financials

Year to 31 Dec (US$m) 2008 2009 2010F 2011F 2012F

Net turnover 428.4 393.4 470.6 607.6 722.8

EBITDA 39.8 31.8 65.0 100.0 125.2

Operating profit 31.2 16.8 48.5 82.0 105.2

Net profit (rep./act.) 38.8 34.7 40.0 55.0 73.0

Net profit (adj.) 38.8 34.7 40.0 55.0 73.0

EPS (US$ cent) 9.2 5.8 6.3 8.7 11.5

P/E (x) 7.9 12.5 11.6 8.4 6.3

P/BV (x) 1.5 1.2 1.1 0.9 0.8

Dividend yield (n.a.) n.a. n.a. n.a. n.a. n.a.

Net margin (%) 9.1 8.8 8.5 9.0 10.1

Net debt/(cash) to equity (%) 100.4 84.7 96.5 90.4 77.7

Interest cover (x) 3.9 2.4 3.3 4.7 5.3

ROE (%) 20.3 13.8 12.6 15.1 17.0

Consensus net profit - - 36.5 53.7 61.7

UOBKH/Consensus (x) - - 1.10 1.02 1.1