15-05-2013, 04:58 PM
(15-05-2013, 02:47 PM)Layman A Wrote: [ -> ]Musicwhiz,
Thanks for the prompt reply. How I wish I have read your blog regarding Swiber earlier.
Greengiraffe, thanks for your insightful analysis.
Having holding Swiber for so long , and losing money ...
There come a point where I have to make a serious decision on whether to hold on to Swiber futher..., or switch to some blue chip like SPH , OCBC etc that pay out regular dividend.
I have decided to take the opportunity to sell it at 0.665 today, with some losses.
I guess these highly speculative play is not too suitable for me.
Some points I've like to highlight regarding Swiber here :
1. Highly leverage and cash tight, just like Olam, but the difference is Swiber do not have a Temasek behind them.
2. The issue of $160 million 7.125% fixed rate note.
Such high borrowing cost will practically eat up all their profits.
The net profit margin of 1Q13 is 8.3%, and they are borrowing at 7.125%, how much is left for the profit margin.
3. Accounts receivable
This is the key point that prompt me to dump Swiber.
In the 1Q13 financial report, they deliberately hide it, but digging further, in the FY2012 report, I found out that the amount have balloned to US$524 millions !
This really have spooked me out .
Consider this, the total revenue 2012 is US$952 millions, net profit is US$62 millions,
but the outstanding amount of receivable amount to US$524 millions !
I think they really have to work harder to recover some of the amounts that the customer owed them.
The above is my opinion for those who wish to plunge their head into this counter.
Good luck.
Your comments about Swiber receivables are interesting. I have been very attracted to Kreutz. They seem to be in a sweet spot with significant revenue growth. However, their receivables to Swiber and Swiber related entities keep ballooning leading me to the conclusion that they are basically funding their parent. Seems a no brainer for Swiber to receive funding at zero percent interest versus their borrowing rates quoted in your post.....However, I think that Kreutz shareholders are taking huge credit risk on Swiber without getting paid for it. Hence, I have avoided Kreutz