Swiber

Swiber: Annouced good 3Q11 results which was in-line. Rev +12% yoy to US$137.7m in 3Q11 due to recognition of offshore construction projects in South Asia and Asean, which were secured in 2010 and 2011.

3Q11 gross profit declined 14% yoy as gross margin came in lower at 16.6% (-5.1ppt) as margins reverted to industry norms and in line with Swiber’s gross margin guidance of 15-20% for EPIC projects. As usual, non-operating items were material swing factors. 3Q11 other operating income included a forex gain of US$4.4m and a fair value gain of US$9.4m.

Mgt is guiding bullish contract win prospects and sees US$7b job prospects in Asean in the next five yrs while South Asia’s (predominantly India) job prospects for the same period would double from US$7b to US$14b. The flip side is its highly geared balance sheet, but group’s capex programme is at a tail-end with gearing forecast to fall meaningfully from 2013 onwards.

The biggest positive is ytd’s strong contract wins of US$758m, which has pushed orderbook to an all-time high of about US$1b. At current price, grp trades at an annualized 7x FY11E P/E, vs historical average of 10x. UOB Kayhian maintains Buy Call with $0.87 TP.