Swiber Holdings Yet another contract extension

Story: Swiber repays our faith in its ability to win new orders with a new
Letter of Intent (LOI) to transport and instal three pipelines off the
coast of Indonesia. This project is worth US$35m. Swiber will start work on
the new contract in the second quarter and expected to be completed by end
2008.

Point: This is yet another contract extension in the past two months and we
think there are three points worth noting. First, Swiber has now firmly
gotten two oil majors as its recurring customer base, including Brunei
Shell, which we believe is crucial in ensuring a steady stream of larger
contracts to feed its enlarged capability. Indeed, this latest LOI is an
extension of an earlier order won in November 2007 from the same unnamed
oil major, and the combined orders won to-date from this customer is about
US$66m.

Secondly, we reckon that Swiber's execution risk with regard to successful
bids for new orders and execution of contracts is now lower as compared to
mid-2007. Swiber's record US$320m new orders win in 2007, and the two
recent contract extensions from the unnamed oil major and Brunei Shell -
who are known to have strict safety and technical requirements - support
this point.

Thirdly, we continue to believe that with two oil majors as its new
customers, it may result in a snowballing effect in attracting other oil
majors to come on board as Swiber's clients in Asia Pacific. As such, we
believe our new orders win assumption of US$400m in 2008 is achievable.

Relevance: Our fair value stays at S$3.49, using 15x FY08 PE. We expect the
contracts flow momentum to be strong through the rest of 1Q 2008, providing
price catalysts to the counter. Maintain BUY.