Swissco

Swissco: CIMB initiates at Add with TP $1.44, based on 9x FY16e P/E. FY16e EPS is derived by factoring in a likely expansion of 11 rigs (four from JV, seven 100% owned) by FY16, based on US$60m capex and US$8m profit per rig. Some fund raising is expected to ensure ample cash balance. CIMB expects Swissco to pursue new rig contracts aggressively thereby underpinning the explosive growth expectations. The house likens Swissco to Ezion, and the stock could appeal to investors who have missed Ezion's rally. The latest acquisition of Scott & English by Swissco is in fact an injection of assets by owner Kim Seng Holdings into Swissco. Management is therefore the SILVER BULLET for Swissco, as KSH owner, Tan Kim Seng was previously the founder of KS Energy. Being in the business since 1974, he offers a strong network in securing contracts for his rigs as well as the financial knowhow to fund the expansion. His abilities are backed by good track records.