Swiber

Swiber: 2Q14 net profit doubled to US$10.1m, as bottom-line was largely fuelled by a 128.7% rise in other operating income (one-off items) to US$19.4m, due to higher FX gains, gain on disposal of associate, and fair value gain on financial instruments. Stripping out the one-off items, Swiber would have reported a net loss of ~ US$8.0m for the quarter. Revenue fell 9.4% to US$219.3m, due to significant revenue from on-going projects which was recognized in FY13 and recently awarded projects which have not yet commence. Gross margins fell to 7.8% from 15.3%, due to lower revenue and high fixed costs. Bottom-line was dragged partly by a 38.9% rise in finance expenses, as a result of higher borrowing and issuance of debt securities. This was offset partly by a 20.2% rise in associate and JV contributions to US$6.8m. Going forward, Swiber guides that oil prices has remained within a healthy range and it is forecasted that most of the major oil and gas companies expect to expand their offshore exploration activities and production capital expenditure. Swiber is capitalising on the increase of activities in the offshore sector by actively bidding for major projects in its target market and geographical region. Barring unforeseen circumstances, management anticipates growth in order book to be coming in over the next two quarters as more bids are being submitted. The group has an order book of ~US$610m, stretching revenue visibility over the next year. At the current price, Swiber trades at just 0.43x P/B.