Swiber

Swiber: Recently announced that it has secured a contract in Latin America worth US$80m. Though this would add to its order book, OCBC still expects weak results for the next two quarters, unless the group clinches more contracts soon with an immediate start date. On a more positive note, Swiber has been able to establish a foothold in the growing energy sector in Latin America, while still bidding for work in its traditional markets like India. At its current price, the stock is already trading below half its book value. However, given the group’s 1) relatively poor earnings quality and lumpy operating cash flows, 2) dim outlook for at least the next two quarters, 3) high leverage and that 4) the stock has been trading at an average of 0.65x book in the past three years, OCBC maintains HOLD rating and $0.63 TP.