Stock that benefits from high oil price (Part 2)

Swiber S$2.82

Swiber is an integrated offshore Engineering, Procurement, Construction, Installation and Commission (EPCIC) contractor with in-house marine support capabilities (Offshore Marine Support). Through the integration of these two core businesses, we are able to provide customers with one-stop solutions for all the relevant stages of their offshore oil and gas projects.

Swiber offer a full suite of offshore EPCIC services which can be customised in accordance with the requirements of the customers in the offshore oil and gas industry. Of significance, Swiber focuses mainly on the development stage, their services are applicable to all stages in an offshore oil and gas project, spanning exploration, development, production and post-production.

Swiber also operates a fleet of marine support vessels which are chartered to customers throughout various stages in their offshore oil and gas exploration, development and production and post-production projects.

For the 3 months ended 31 March 2008 (1QFY2008), the Group posted revenue of US$70.9 million, a year-on-year increase of 266.9% over US$19.3 million in 1QFY2007. Net profit soared more than 180% to US$10.4 million from US$3.6 million previously. Swiber’s strong first quarter was largely due to increased number of EPCIC projects completed during the period and contributions from its shipyard business. In 1QFY2008, the Group recorded gross profit and margins of US$18.3 million and 25.9% espectively.

Said Swiber’s Executive Chairman and Chief Executive, Mr Raymond Goh, “Demand for our niche services remained strong in the first three months of 2008. During the quarter, Swiber completed three pipeline projects and two installation projects in Malaysia and Indonesia which propelled us to a good, strong start in 2008.”
He continued, “Swiber’s growth momentum in each successive quarter is quite remarkable. We have grown our top-line more than 250% in 1QFY2008 year-on-year, and 16% quarter-on-quarter vis-à-vis US$61.1 million in 4QFY2007. I am very pleased with our results and, with oil prices reaching a historical high of US$126 per barrel just last week, I am confident that, barring unforeseen circumstances, Swiber will be able to continue to perform well in the next nine months based on the schedule of projects to be completed.”

“Currently, Swiber operates a fleet of 28 owned vessels, compared to a mere 10 vessels a year ago. This fleet expansion strategy has significantly reduced our third party charter-in costs and kept our profitability levels healthy. We firmly believe that this strategy will pay off in the longer term as it will give us the necessary scale and vessel capacity to bid for, and handle, more offshore oil and gas projects as well as expand geographically,” said Mr Goh.

To spearhead its growth, Swiber will continue on its fleet expansion strategy, with the aim of increasing the number and technological capabilities of its vessels. In addition, the Group has extended its capabilities to subsea and deepwater activities; and ship building, design and engineering.