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Maybank Kim Eng initiated its coverage of offshore services firm Swiber Holdings Ltd with a 'buy' rating and S$0.82 target price, citing the stock's low valuations and limited downside.
Swiber shares were up 4.2 percent at S$0.62 on Wednesday. The shares have risen 16 percent so far this year versus the 23 percent gain in the FT ST Small Cap Index.
Maybank expects Swiber's earnings per share to grow at a compound annual growth rate of 18 percent over 2012-2014 fiscal years, supported by the recognition of its $1.4 billion offshore construction order book and contract win momentum.
Swiber's fleet size increased from 10 vessels in 2006 to more than 50 currently, allowing it to handle more sophisticated jobs, depend less on third-party vessels and have greater flexibilities in fleet deployment, Maybank said.
The broker added that Swiber stock is a relative "laggard", trading at a price-earnings ratio of 5.8 times for 2013 fiscal year and a price-to-book of 0.6 times. But it noted there might be an overhang from high gearing and cash needs.
1005 (0205 GMT)