Swiber Holdings Limited: Order flow woes

- Lack of major order wins since mid-2010 has led us to
cut FY11/12F earnings by 35%/44%.

- FY10 results in line with recurring PATMI of S$31m.

- Downgrade to HOLD, TP lowered to S$0.83.

Order flow woes. Swiber’s FY10 order wins of only c.US$435m was significantly below our US$800m assumption on delays in contract awards. This has led to a reversal in orderbook momentum, with a backlog of US$680m as of March 2011, down 15% vs. US$800m a quarter ago. Notwithstanding Swiber’s sustained efforts in bidding for work, with around US$1.5-3bn under tender, we have lowered our FY11 order wins assumption to US$450m from US$800m. No change to FY12 order wins assumption of US$600m.

FY11/12F slashed. In line with Swiber’s lower FY10 order wins and the reduction in our FY11 order wins assumption, FY11/12F recurring earnings have been cut by 35%/44%. Around 74% of FY11F revenue is backed by secured orders, which drops to 34% for FY12.

FY10 results in line. On the back of the pick up in contributions from projects in South Asia and SE Asia secured from 4Q2009, Swiber reported revenue of US$469.7m (+19% y-o-y). Headline net profit came in at US$37.3m (+7% y-o-y); adjusting for one-offs and exceptionals, we estimate recurring net profit to be US$31m.

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