DBSVickers Report - 21 Dec 2007

Swiber Holdings Order book to continue swelling

Story: Swiber announced that it has won a contract extension from Brunei Shell Petroleum (Brunei Shell) for transportation and installation of offshore facilities off the coast of Brunei. The extension work is scheduled for 2009, and we estimate the contract value to be about US$53.4m.

Point: This latest contract win is significant, as it is an extension of Swiber’s earlier US$146.6m contract win from Brunei Shell, and brings the total contract value from this oil major to about US$200m. We believe this implies that that Swiber has fulfilled the stringent requirements of Brunei Shell’s original contract well, and should provide reassurance to other oil majors and national oil companies on Swiber’s ability to deliver on big contracts leveraging on its enlarged offshore EPCIC capabilities.

Relevance: We are maintaining our recurring earnings estimates in the FY07-09 forecast periods. Our fair value for Swiber is S$4.18, using 18x diluted recurring FY08 PER. Maintain BUY.