Swiber: says it is looking to raise new capital (est $100-200m). DMG says this is no surprise given that Swiber’s net gearing at 1.2x now, has been on an uptrend since its last pte placement in Jun ’09 (84m new shares at $0.88/sh), due to new capex and higher working capital.
While mgt says the fund raising is to strengthen its balance sheet and use it for earnings accretive exercise, DMG warns this could be earnings dilutive in the near term if the funds are not deployed immediately.
Following the 1H11 results and mgt briefing, DMG cuts FY11-12F core net profit by 5-6% to reflect lower margins and higher minority interest. Slashes TP to $0.50 (previously $0.87), pegged to 0.5x FY12E P/B, reflecting the low adjusted net profit to assets (FY11E: 2%) and to equity (FY11E: 6%), as well as concern over the high net gearing. House maintains Neutral rating.