Things can only get better!
– Based on a lower discount rate and an increased TV-EBIT margin assumption, we are raising our 12-
month target-equity price to EUR 32.0. We confirm our Hold recommendation.
– Driven by lower capacity utilization and a weakening USD, SBO’s 3Q09 results dropped quite
significantly. Sales were down 46.6% y/y and EBIT declined 85.2% y/y. Being late in the cycle, SBO’s
operating performance continued to deteriorate sequentially as well. Sales declined 11% q/q and EBIT
dropped by 42% q/q.
– At EUR 37.5mn SBO’s 3Q09 order intake stabilized compared to 2Q09 at EUR 37mn. Management
indicated that inquiries started to pick up in 3Q09. Net-debt dropped to EUR 69.9mn thanks to a sound
cash-flow development
– There is clear evidence from the industry that demand for oilfield equipment bottomed out in 2Q09. The
global rig count has continued to rise on a monthly comparison since May 2009. We also believe that
vigorous Chinese loan growth (+32.1% y/y in September 2009) will remain supportive for oil prices as
well as all other types of commodities.
– We believe that SBO is a perfect bet on the rising complexity of the global oilfield service industry.
However, we are currently not sure whether the upswing will be visible in 2010. Furthermore, we deem
the current market expectations based on the current valuation level as fair.
