Swiber

Swiber: UOB Kay Hian note results appear to be in line with expectation. 1Q12 net profit was 20% of house net profit of US$42m for 2012. Expect better performance in subsequent qtrs of 2012 as Swiber progressively books out its larger orderbook. Turnover is 29% yoy higher because of a larger orderbook resulting from strong contract wins in 2011 and ytd. Orderbook currently stands at about US$1.2b vs. circa US$800m a year ago. Better earnings quality this time round as the bulk of 1Q12 earnings came from Swiber's core business while 1Q11's earnings were substantially boosted by non-core other operating income of US$11.0m (included fair value gain US$6.9m + gain of interest rate swap of US$2.9m). Despite a fall in non-operating income from $11.0m 1Q11 to $1.9m in 1Q12, 1Q12 PBT was 28% yoy higher. Excluding non-operating income, net profit would have registered a growth instead of a decline of 11%, notwithstanding 1Q12's higher tax and MI. Gross profit margin improved by 3.6ppt from 16.2% in 1Q11 and 19.8% in 1Q12. While admin expenses of US$13.8m in 1Q12 were 9% higher yoy, it was encouraging that these expenses were substantially lower than 4Q11's US$21.3m. 4Q11's sharp increase in administrative expenses was a concern. House maintains Buy with $086 TP