Swiber Holdings is a service provider in the offshore oil and gas industry, offering offshore EPCIC, marine support and drilling services across the Asia Pacific and the Middle East .
With the drastic fall in oil prices, Swiber is unlikely to be spared by cut-backs on E&P expenditures from oil companies, but it should be kept busy for this year with its strong order book of US$607m (last announced 30 Sep 08).
Swiber is still bidding for US$4.2b worth of contracts for execution over the next five years and we account a 15% (historically ~20%) win rate, translating to US$630m worth of possible contracts. We are mindful that contract flow might be slow in 1H09 due to the cautious outlook on oil but any wins will be a positive share price catalyst.
The stock has fallen more than 85% since Jan 08 and we see limited downside risk. Swiber is currently trading at its historical low valuation of ~2x FY09F earnings. We initiate coverage on Swiber with a BUY recommendation and S$0.66 fair value estimate.
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