Monday, August 13, 2007

Swiber 2Q results

Again, the results release of Swiber this morning caught me off guard. I wasn't even aware that they are releasing results today :P Good thing I bought in last week, haha!

Swiber released an excellent set of 2Q results this morning. The net profit yoy increased 678% and profit after tax increased 486.4%. Revenue increased 232% from last year. I'm not so happy to see that the gross profit margin increased from 19% last year to 29.4% this year. If other income (gain of USD $2.5 million from disposal of vessels) is taken out of the gross profit, gross profit margin is around 18 +%, which is around the same as gross last year's 19%. The fact that they release it in the press makes it all the more heady for investor who didn't crunch the numbers.

Cash flow is rather healthy after they disposed their vessels (USD $2.5 million ) and new bank loans of USD $17.5 million. A large portion of their cash (USD $15.5 million) went into purchases of plant and equipment (they increased their fleet of vessels) and additions to non-current assets held for sale (i have no idea what this is...this cost them USD $22.39 million). Despite their increased leverage position, their debt to equity ratio is 0.53 as mentioned by them. This looks very good. I initially thought they are going into debt to equity ratio of nearing 1, because of the aggressive expanisionist management and hence the need for more loans.

As long as their contracts keep coming in, I think it's not a problem for them. As the sector is red hot, I don't think that's a problem too. I would like to see more contracts coming in from regions in which they have not gained a foothold, like India and middle east. If they do announce such contracts or letter of intent, it would consolidate their position as the leading EPCIC contractor in this region.

As of June 07, Swiber has total outstanding order book of around US$218.70 million. Looking forward to more positive announcements from them.