Swiber delivered a disappointing set of 3Q08 results, with net profit dipping 19% y-o-y to US$16.0m. The main culprit was the slump in gross margin to only 20% in 3Q08, vs. 26% in 1H08, which Swiber attributed to the greater use of third-party vessels due to worse than expected weather condition that obstructed work progress. Headline net profit in 9M08 only increased 59% y-o-y to US$47.2m in FY08, which is below expectation.
The silver lining is the reduced financing concern, with Swiber prudently postponing the construction of the deepwater drilling vessel till there are signs that the current credit crunch is over. The committed capex now drops to only US$336m, which is more than matched by an estimated US$413m in secured funding and US$77m in estimated cash flow from operation in the 4Q08-FY10 periods. Swiber has also received full payment for the 6 vessels delivered to-date under sales and leaseback agreements (SLAs), and have collected 20-25% downpayment for the remaining 9 vessels under SLAs.
Still, in view of the dismay earnings performance in 3Q, we have revised down our net profit forecast to US$70m for FY08 and recurring net profit to US$47m. We also forecast Swiber's net gearing to be 1.1x by end FY08 (vs. 1.0x as of end 3Q08), 0.5x by end FY09, and 0.2x by end FY10.
DBS Group Research, Equity; 18 Nov 2008
Wednesday, November 19, 2008
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