Thursday, September 06, 2007

Swiber - Purchase of Derrick Crane worth US$53.13 Million

On September 6, 2007, Swiber announced the acquisition of yet another vessel. This time, it's a derrick crane worth US$53.13 million purchased from Hydralift AmClyde Inc. (Amclyde). This new vessel is slated to be delivered in 3Q FY 2009 and can lift a total of 4,180 tons, making it one of the largest heavy lift cranes in the Asia-Pacific region.

This most recent purchase comes hot on the heels of their previous announcement (on August 30, 2007) regarding the acquisition of 4 barges, 3 accommodation ones and 1 submersible, to be delivered from 4Q 2007 through 1Q 2009. The company is certainly expanding their fleet very aggressively, as it has been less than a year since its listing on the SGX, yet it has already snared a number of large contracts and made announcements to acquire a myriad of vessels. In addition, the company has also utilized its listing status in order to raise more funds by tapping on to the equity markets (private placement) and bond markets (multi-currency medium term note programme). Being listed also gave them additional visibility and recognition as one of the more promising players in the fast-growing EPCIC niche industry within South-East Asia, which perhaps is one of the factors for Swiber being able to work with R.S. Platou (for the 2 sale-and-leaseback transactions) as well as finding a partner in AmClyde (for their most recent purchase).

Below is a list of Swiber's current fleet as well as its expanded fleet. I have included the approximate dates of delivery as well. It is hoped that with an expanded fleet equipped with cutting-edge technology and heavy-lift capabilities, it can snare contracts of larger size from a bigger pool of customers.

Swiber's Current Fleet of 20 vessels (FY 2007)

Swiber's Second Wave of Fleet Expansion (FY 2007 to FY 2009)

Swiber's Future Expansion Plans

I would expect Swiber to use the proceeds from their recent bond issue and the upcoming sale and leaseback to purchase more vessels to carry on their next wave of expansion. At the same time, the company is also aggressively recruiting talented and experienced Management staff in order to broaden their knowledge base and expertise. FY 2008 should be a very exciting year for the company as it embarks on its ambitious expansion plans; and it is also the year when a lot of the newly ordered vessels would come on board, thus they will be available for deployment for EPCIC jobs. I will be updating my blog when more announcements come from the company. In the meantime, shareholders should sit back and look forward to more corporate developments to be announced.


TheKen said...

hi musicwhiz, cant find any way to contact u so im leaving a comment instead.

would you like to exchange links with my shares blog ?

it is

musicwhiz said...

Hi theken,

I have left a comment on your blog as well. Yes, let's exchange links. Hope you can put up some search function on your blog as well to make it easier for readers to search for info. Maybe you can try labels like what I have done. I am interested in any research and independent views you may have on Boustead.

Thanks !

TheKen said...

Those labels you have are a good idea .....guess ill have to do it for the readers...argh, lazy.

i have added your link with the text back as

"Value Investment - Musicwhiz's Journey"

feel free to contact me at

musicwhiz said...

Hi theken,

Thanks for adding me, I have added your blog link as "Singapore Stock Market". Hope this is OK with you.

Btw, I took a whole hour to add those labels as well, but it's well worth the effort ! :)

Alen said...

I share the same positive view of the company. Proactive management, more coverage from the analyst could pop up the share price in near future.
Now it depends on whether they can announce more contracts.
From your understanding, which part of the operation would bring in recurring business?

musicwhiz said...

Hi alen,

Yes, I think the business is doing fine but of course for any company having such aggressive expansion, there are also many inherent risks such as execution risk and risk of burning up their cash too soon. Still, Warren Buffett mentioned that growth investing and value investing are joined at the hip, which is why you are paying for less than what a business will be worth in future.

Contracts wise, I believe we should see more in FY 2008 rather than be too optimistic in FY 2007, as the company is building up their funds and cash for fleet expansion and also beefing up their Management Team. Still, Swiber could surprise with another contract for FY 2007 as there are still about 4 months left till the end of the financial year.

The part of their business which would bring in the most revenues is, of course, their EPCIC specialization. With more vessels of specialized design, they can cater to more complex jobs which means higher chances of snaring contracts, better project co-ordination and also more flexibility in managing a job (contract size would also be potentially larger).