Swiber Holdings (KE)

Strong Start to the Year

Maintain Buy.

in FY12, which supports our upbeat view on Swiber. Tendering

environment remains strong for offshore construction and contract wins

plus execution is critical for Swiber in order to benefit from better

utilisation of its vessels. This would support a positive re-rating for the

stock and relieve balance sheet concerns. Maintain Buy with TP of

SGD0.84, which is pegged to 8x FY13F PER.A very strong set of 1Q13 results following a record year

1Q13 above expectations.

YoY, +18% QoQ) with corresponding PATMI of USD20.1m (+132%

YoY, +38% QoQ). Results were above expectations with PATMI

making up 43% of our previous FY13F estimate. This is due to

significant contributions from work done in Mexico and Myanmar, higher

associate contributions and lower effective tax rate. However, the

strong quarter should not be extrapolated to derive full year results due

to the lumpiness in revenue recognition for Swiber’s business.1Q13 revenue rose to USD310m (+59%

Main worry in order wins.

contract wins since Feb 2013. YTD order win stands at USD153m with

outstanding orderbook at USD1.1b. Our expectation is for USD1.2b in

new contract wins this year. Contract wins can be lumpy and there is

still time to play catch up, but this will be the focus for us to watch for

from now. Our earnings forecast are at risk if contract wins falls short of

our expectations. Swiber maintains that tendering is healthy and is

bidding for close to USD2b worth of contracts, which includes 3

relatively large-sized contracts that could come to fruition this year.Swiber has not announced any new

Balance sheet strain to ease.

end-FY12. Swiber recently drew down SGD160m from its MTN

program through issuance of fixed rate notes at a relatively high cost of

7.125%. We expect balance sheet strain to ease as high capex needs

for fleet expansion has almost come to an end.Net gearing rose to 1.0x from 0.95x at

Still below book.

believe is mainly due to the weak balance sheet. Financials should

improve if Swiber continues to secure contracts and execute. We raise

FY13-15F earnings forecasts by 3-5%. Maintain Buy.Stock is still trading below book (0.7x P/B), which we

Swiber Holdings – Summary Earnings Table

FYE (USD m) FY11 FY12 FY13F FY14F FY15F

Revenue 654.5 952.2 1,073.7 1,223.2 1,381.8

EBITDA 108.0 138.5 146.4 180.9 202.3

Recurring Net Profit 32.1 45.7 52.1 64.9 76.6

Recurring Basic EPS (cents) 6.3 7.7 8.6 10.7 12.6

EPS growth (%) (14.0) 21.1 11.5 24.6 18.0

DPS (cents) 0.0 0.8 0.8 0.8 0.8

PER 8.8 7.3 6.5 5.3 4.5

EV/EBITDA (x) 9.5 7.4 7.0 5.7 5.1

Div Yield (%) 0.0 1.5 1.4 1.4 1.4

P/BV(x) 0.8 0.7 0.6 0.6 0.5

Net Gearing (%) 87.9 95.0 89.3 81.8 73.0

ROE (%) 9.4 10.8 10.3 11.8 12.6

ROA (%) 2.7 2.7 2.7 3.2 3.6

Consensus Net Profit (SGD m) 53.8 64.5 71.9

Source: Company, Maybank KE