Swiber

Swiber: OCBC note that more Indonesian work in the pipeline? Indonesia’s state-owned Pertamina Hulu Energi has invited contractors to register their interest in the bid round for the GG oilfield development. According to Upstream, the consortium of Meindo Elang Indah and Swiber Offshore has registered for pre-qualification. With a declining rate of oil production in Indonesia, expect the country to increase oil field development and production activities, benefiting EPCIC contractors such as Swiber Holdings. The industry outlook is buoyant but in order for the stock to re-rate, think the group has to demonstrate that it is able to grow its operations by the generation of sustainable operating cash flows besides the support of leverage. Given the limited upside potential to our fair value estimate of $0.66, house maintain HOLD rating.