Positive new order trend
– Based on a lower risk-free rate and slightly increased estimates, we raise our 12-month equity target
price to EUR 40.5 (after EUR 37.0). We confirm our Hold recommendation.
– SBO’s new orders picked up significantly in 1Q10 and rose by 127% q/q to EUR 83.9mn. Supported by
cost cutting measures, SBO’s 1Q10 EBIT margin rose by another 170bp to 9.1%.
– Operating cash flow rose by 106% to EUR 21.4mn. Net debt dropped to EUR 31mn, bringing the gearing
ratio down to just 12.6%.
– CEO Grohmann indicated that new orders in April 2010 accelerated further, thus confirming the positive
trend witnessed in 1Q10.
– Our peer group comparison shows that SBO’s stock trades with quite a significant mark-up compared to
major peers and clients. Even if we take into consideration the fact that SBO is focused on the fast
growing directional drilling market, this picture shows the limited upside potential for the stock.
