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1、,services,3,062.1,297.6,1.3,9.0,%,7.0,5.8,5.8,683.7,9.0,0.82,3.5,Co.Reg No:198700034EMICA(P):099/03/2012Singapore,Initiating CoverageBuy(new),4 December 2012Swiber HoldingsLaggard play with limited downside,Share price:Target price:,SGD0.595SGD0.82(new),Riding on the oil and gas upcycle.We initiate
2、coverage on Swiberwith a BUY rating and target price of SGD0.82,pegged at 8x FY13FPER.We expect EPS to grow at a CAGR of 18%over FY12-14F,supported by recognition of its USD1.4b offshore constructionorderbook and sturdy contract win momentum.Swiber is establishing a,YEAK Chee Keong,CFAyeakcheekeongm
3、aybank-.sg(65)6432 1460Stock InformationDescription:An offshore marine support company.Itsservices include engineering,procurement and construction,stronger presence in the offshore construction space,garnering aclientele of international oil and gas players and is thus in a sweet spotto ride the of
4、fshore oil and gas upcycle.Enlarged fleet to take on bigger roles.Fleet size increased from only10 vessels in 2006 to more than 50 currently,including 15 constructionvessels.This allows it to handle more sophisticated jobs,have lesserdependence on third-party vessels,and therefore greater flexibilit
5、ies infleet deployment.The results would be better cost controls,marginimprovements and the ability to bid more aggressively for contracts.Record contract wins with more to come.Strong contract wins is an,Ticker:Shares Issued(m):Market Cap(USD m):3-mth Avg Daily Turnover(USD m):ST Index:Free float(%
6、):Major Shareholders:Pang Yok MinRaymond GohJean PersYeo Chee NengKey IndicatorsROE annualised(%)Net cash/(debt)(USD m):NTA/shr(USD):Interest cover(x):Historical Chart,SWIB SP609.465.0,early testament to the success of its fleet expansion plans and also areflection of the robust contract award envir
7、onment.Outstandingorderbook stood at USD1.4b as at Nov 2012 which would providesupport for its topline for the next 2 years.2012 has been a bountifulyear of contract wins with YTD orders received in excess of USD1.7b(USD733m in 2011).Swiber is confident that bidding environment in2013 would be even
8、better.Overhang from high gearing and cash needs.Capex needs for fleetexpansion necessitated Swiber to incur a large amount of debt.Netgearing stood at 1.0 x as at 9M12 but should trend down to 0.8x by end-FY12.It also issued SGD80m of 9.75%perpetual securities recently.Fleet expansion is at its tai
9、l end but we foresee that cash needs are stilltight as Swiber intends to repurchase more sale-and-leaseback vesselsfor better economics.Relative laggard,low valuations,limited downsides.The stock is arelative laggard,trading at only 5.8x FY13F PER and 0.6x P/B.Whilegearing and cash needs are valid c
10、oncerns,at current valuations,downside is limited and supported by our RNAV valuation of its assetswhich comes up to SGD1.11 per share.Initiate with BUY.Swiber Holdings Summary Earnings Table,FYE(USD m)RevenueEBITDARecurring Net ProfitRecurring Basic EPS(cents)EPS growth(%)DPS(cents)PER,FY2010465.77
11、5.737.37.4(0.3)0.06.6,FY2011654.5108.032.16.3(14.0)0.07.6,FY2012952.3118.040.26.86.61.07.2,FY20131,046.8136.650.68.323.21.05.8,FY20141,210.2164.962.910.424.31.04.7,Performance:52-week High/Low,SGD0.785/SGD0.495,EV/EBITDA(x)Div Yield(%)P/BV(x),12.90.00.8,9.10.00.7,8.32.10.6,7.22.10.5,5.92.10.5,Absolu
12、te(%)Relative(%),1-mth1.71.0,3-mth-0.8-2.5,6-mth15.51.8,1-yr7.2-2.9,YTD11.2-3.9,Net Gearing(%)ROE(%)ROA(%)Consensus Net Profit(SGD m),94.122.97.5,87.99.42.7,77.49.22.740.6,74.09.53.153.5,65.911.03.673.3,Source:Company,Maybank KESEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS,Swib
13、er HoldingsLaggard play with limited downsideA relative laggard.Swiber has been a relative laggard among thesmall-caps offshore and marine(O&M)stocks.Taking reference fromJan 2011,its share price has underperformed most of its O&M peersand also that of the STI.Being a beneficiary of the offshore exp
14、lorationand production(E&P)sector,Swiber could be due for a re-rating givenits growing orderbook traction.Figure 1:Relative share price performance of small-caps O&M stocksIndex(Jan 11=100),200180160140120100806040,EzionEzraTechnicsJayaASL MarineSTX OSVSwiberSTI,Swiber,Jan-11,Apr-11,Jul-11,Oct-11,Ja
15、n-12,Apr-12,Jul-12,Oct-12,Source:Bloomberg,Maybank KEChance to strengthen its market position.Robust activities in theoffshore E&P segment would filter down to benefit offshore servicesplayers like Swiber.With specialisation in shallow water offshoreconstruction and subsea activities in the Asia Pac
16、ific and Middle East,Swiber would stand to gain from potentially strong contract awards inthe region as oil&gas companies increase their capex and opex overthe next few years.We believe that Swiber would take advantage of thecurrent positive environment to strengthen its foothold in the offshorecons
17、truction space.An enlarged fleet with young and modern vessels.Swiber went onan aggressive fleet expansion program which saw its fleet size growfrom just 10 vessels in 2006 to more than 50 vessels today,including15 offshore construction vessels.The enlarged fleet places it in a betterposition to bid
18、 for larger size and more complicated projects.It alsoreduces its reliance on third-party vessel chartering,saving on leasingcosts and thereby allowing Swiber to have greater flexibilities incontract bidding as well as greater efficiencies in vessel deployments.This should eventually translate into
19、better margins.Early success shown in strong order wins.We have seen earlysuccesses from strong contract wins this year.Net orderbook reached ahistorical high of USD1.6b in 2Q12 although it has come down slightlyto USD1.4b in 3Q12.2012 has been a bountiful year for Swiber interms of order wins,with
20、YTD contracts secured in excess of USD1.7b,significantly higher than the USD733m secured for the preceding year.Importantly,management expects the bidding environment in 2013 tobe even better than 2012.Majority of the current outstanding orderbookshould be recognised within the next 2 years.,4 Decem
21、ber 2012,Page 2 of 24,Swiber HoldingsContract wins and execution will be positive catalysts.Indicationsthat would support our prognosis on Swibers prospect would first comein the form of more contract wins in 2013.Secondly,we also expectimprovements in margins,which would signal that Swiber is indee
22、dreaping greater efficiencies from the benefits of a bigger owned-fleet.These are two key signs which we believe would trigger positive stockprice response.Funding and cashflow overhang.The key concerns on Swiber wouldbe its funding needs,high gearing and weak operating cashflows.Witha combination o
23、f large capex needs over the last few years and workingcapital requirements,it has been drawing down on its SGD700mMedium-term notes(MTN)loan facility.While it has redeemed somethese bonds,we believe that it would need to refinance some of themas its cashflow and balance sheet may not be strong enou
24、gh to meet itscash needs in the next 1-2 years.It may also need more cash torepurchase more sale-and-leaseback vessels.We estimate that it stillhas about SGD180m available for drawdown from its MTN program.Italso recently issued SGD80m in perpetual securities with a distributionrate of 9.75%p.a.Net
25、gearing stood at 1.0 x as at 9M12 but shouldtrend down lower to about 0.8x at end-FY12 as it has redeemed someof its bonds and convertible loans.Based on our forecast,it would alsoturn free cash flow positive from FY14F,as operating cashflowimproves from execution of more projects.Limited downside a
26、t current valuations,initiate with BUY.Swiber istrading at FY13F PER of only 5.8x,below its mean forward PER of10.8x and below Singapore-listed small caps O&M peer average of8.0 x.Additionally,it is also trading at only 0.6x P/B.We see earningsgrowing at a CAGR of 18%for FY12-14F,from a strong strin
27、g ofcontract wins.While concerns on gearing and funding could beoverhangs,we see limited downside at current low valuations.Initiatewith BUY and target price of SGD0.82,pegged at 8x peer averagePER.Valuations is also supported by our RNAV valuation of its assetswhich yields a value of SGD1.11 per sh
28、are.,4 December 2012,Page 3 of 24,Swiber HoldingsOffshore sector buzzing with activitiesOffshore expenditure growth.Global offshore spending is expectedto grow considerably over the next few years.Based on IHS UpstreamSpending report released in April this year,global capex and opexcombined is estim
29、ated to reach a record of USD1.23t for 2012 andexpected to grow by CAGR of 7.4%to USD1.64t in 2016.Capexactivities drive offshore construction works while opex activities arerelated to inspection,repair and maintenance(IRM)works,wellworkovers and re-entries,accommodation and decommissioning.Withsust
30、ained high oil prices to support E&P spending by oil majors,webelieve that E&P investments would continue to be strong.Figure 2:Global Offshore Sector Spending1,2001,000800,USD b,600400200,0CapexE&P SpendingLNG/PipelinesOpex,201272864187500,201378469293538,2014859755104580,2015919808111625,201696384
31、1122671,Source:IHS Upstream spending report(Apr 12),CompanySwiber to benefit from growth in Asia-Pacific region.While onshorespending would account for the largest share of total capex,offshorecapex growth is expected to outpace that of onshore capex.As evidentin the following chart,the Asia-Pacific
32、 region is a key source of growthfor offshore spending,and is a key contributor to global offshore capexgrowth.The Middle East is also expected to be the main growth regionin terms of total spending.Swibers existing presences in these regionsplace it in a strong position to benefit from this growth.
33、Figure 3:Global Offshore Sector Spending By Region600500400300,USD b,200100,0AfricaAsia PacificEuropeMiddle EastNorth AmericaRussia&CaspianLatin America,201213223893133392119121,201314026095142429128129,2014144286100151477143138,2015155312105165506154148,2016167323110181528163163,Source:IHS Upstream
34、 spending report(Apr 12),Company,4 December 2012,Page 4 of 24,2012F,2013F,2014F,2015F,2016F,2007,2008,2009,2010,2011,Swiber HoldingsSubsea potential growing.The use of subsea technologies has beengrowing in prominence with increasing demand for oil,rising waterproduction from matured fields and high
35、er surface facility cost.Advancement in technology is pushing subsea as a viable option toimprove the economics of oil extraction.According to DouglasWestwoods“World Subsea Hardware Market Forecast”for 2012-2016,spending is expected to total USD135m over the five-year period,a14%increase over the pr
36、eceding five years.65%of spending wouldcome from West Africa,Gulf of Mexico and Brazil with subsea pipelineconstruction being be the key spending driver.Figure 4:World subsea hardware market forecast 2012-2016US$b35302520151050Source:Douglas WestwoodSwibers subsea unit to benefit.Swiber has a subsea
37、 unit,KreuzHoldings Limited,which is also separately listed after it was spun off in2010.Subsea tendering activity is expected to be strong withestablished players such as Subsea 7,Technip and Saipem beingupbeat in their outlook statements.Kreuz has similarly echoed thepositive sentiments in the ind
38、ustry and this is substantiated by thegrowing order wins it has been able to secure since IPO listing in 2010(see Figure 12).Shallow water focused,lower oil price hurdle.Swibers shallowwater focus requires a lower hurdle oil price in order to continue withoffshore activities.Typical breakeven oil pr
39、ice for shallow water projectscould be in the range of USD40-65/bbl,while deepwater projectsrequire USD70-80/bbl and ultra deepwater could require USD80-100/bbl.In a way,Swiber has more cushion leeway against fall in oilprice.Sector consolidation,Swiber a potential M&A target?The industryhas seen se
40、veral consolidations in recent years,the more prominentbeing that between Subsea 7 and Acergy,Technip and GlobalIndustries,and SapuraCrest and Kencana.The potential of Swiberbeing acquired or merging with another player to enhance each otherscompetitiveness is entirely plausible.With its below-book
41、valuationsand funding needs,we think that Swiber makes a good case as apotential M&A target.,4 December 2012,Page 5 of 24,Swiber HoldingsBuilding its name in offshore constructionStarting out.As a pure-play vessel charterer prior to 2002,Swiber wasan unknown name when it first ventured into the offs
42、hore constructionspace.It started out by taking on sub-contract works from biggerplayers.Swiber also started to form alliances with local players invarious geographies through joint ventures.Swiber understands thatbuilding a proven track record is instrumental to increase its chances ofsecuring futu
43、re contracts.Through these activities,Swiber establishedits reputation as a reliable offshore services player.Figure 5:Joint Ventures which Swiber has/had established with local players,DateDec-06Jun-07Sep-07Sep-07Feb-08Oct-08Jun-09Sep-09Sep-09,Counter PartyCalox ConsultantsEmirates InvestmentsRaham
44、an Sendirian BhdPetrovietnam Construction&VietsovpetroPrincipia Recherche&DevelopmentRawabi HoldingCUEL LimitedAlam Maritim ResourcesAlam Maritim Resources,JV CompanySwiwar Offshore Pte LtdPrincipia Asia PacificEngineeringRawabi Swiber OffshoreConstruction CompanyCUEL Swiber OffshoreAlam Swiber DLB
45、1Alam Swiber Offshore,Interest splitSwiber:Counter party50:5051:4949:5150:5051:4950:5050:50,RegionIndiaMiddle EastBruneiVietnamSoutheast AsiaGulf CooperationCountriesThailandMalaysiaMalaysia,PurposeJointly market and provide offshore marine support servicesExpand EPCIC activities of Swiber in the th
46、e Gulf Region,the MiddeleEast incl.PakistanAllow Swiber to bid for projects eligible onlly to Brunei incorporatedcompanies3-year cooperation to extend Swibers reach into the Vietnam oil and gasmarketUndertake supply and slae of studies,design of offshore&marine facilitiesand relates servicesEPCIC pr
47、ojects and marine activities in Gulf Cooperation CountriesDrive offshore construction activities in Thailand,and to own and operatederrick lay barge to support offshore installation and construction projectsin the regionAcquire a derrick lay barge to undertake offshore construction andinstallation p
48、rojects in MalaysiaEngineering and technical support services,Source:Company,Maybank KEGrowing its clientele.Today,it competes in a bigger league withinternational players like McDermott,Saipem,Global Industries,andHorizon Offshore.Its customer list includes big international oil playerslike Brunei
49、Shell,Pemex and Premier Oil.Its Offshore EPCIC,(Engineering,Procurement,Construction,Installation,and,Commissioning)business accounted for 76%of its total revenue ofUSD655m in FY11.This could grow to 81%by FY14F,based on ourforecast.Expanding its market reach.While its traditional strong markets are
50、 inthe Asia-Pacific and Middle East region,it has been securing contractsfor works in the Gulf-of-Mexico in the past year.The geographicaldiversification of its business also offers the flexibility for efficient use ofits vessels during various working seasons in the different regions.Forexample,dur
