Swiber’s 2Q13 net profit declined 72.5% yoy to US$4.2m even as revenues increased 5.4% yoy to US$242.1m. The increase in revenues came increasingly from South East Asia, making up 90% of total revenues. The decline in net profit was mainly due to higher admin, finance and other operating expenses.
Key takeaways from results:
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2Q13 revenues increased 5.4% yoy to US$242.1m mostly from South East Asia.
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South East Asia sales grew by 105% yoy to US$218.5m.
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2Q13 gross profit margin of 15.3% was an increase of 1.1% pts yoy.
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Higher admin was due to increase in employee compensation.
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Higher other operating expenses was due to higher fair value gain on financial liabilities.
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Finance expenses increase was due to higher borrowing and issuance of debt securities.
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Its recently issued S$150m 6.5% fixed rate certificates allows the group to expand and seek further growth.
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Group has current total order book of around US$1.2b.
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Group is confident that it is well positioned to win more major contracts in the coming years.
Our view:
As we mentioned in our Kreuz’s 2Q13 results briefing note, oil and gas companies are still seeing continued capex in offshore activities, especially in deep waters, translating into more opportunities for offshore and subsea contractors that perform platform, pipeline and subsea installations as well as inspection, repair and maintenance works. This will ultimately benefit Swiber’s business. It has already clinched more than US$570m of contracts YTD and total order book increased from US$1.1b in the last quarter to US$1.2b currently.
It is currently trading at 7.2x historical P/E. Consensus estimates FY13 P/E at 6.4x and FY14 P/E at 5.1x. We are optimistic on the offshore space and given that its current valuation and estimates are below its 5 years average historical P/E of 8x, we believe that valuations are undemanding.