Maybank Securities analyst Jarick Seet has maintained “buy” on Marco Polo Marine 5LY (MPM) with a target price of 8 cents following the company’s FY2024 ended September results release.
In his Dec 3 note, Seet highlights that MPM”s FY2024 revenue dipped 2.8% y-o-y to $123.5 million, mainly due to the drop in repair and maintenance revenue caused by the delay of its commissioning service operation vessel (CSOV).
The delay led to fewer third party repair works in 3QFY2024, which also caused a shortage of staff to work on third party repairs. These issues, however, have been resolved and utilisation of its repair capacity has risen from 50% to about 75%, Seet adds.
“We also expect more volume driven by expansion of its fourth dry dock, which could see revenue rise 25%. The crew transfer vessels (CTVs) that it acquired are operational and will also help to boost profitability with rates expected at around US$8,000 per day,” he says.
Maybank expects MPM to add another one or two CTVs by end-2025, increasing its CTV fleet to up to five vessels.
MPM’s CSOV is close to completion and should sail to Taiwan by end-January 2025. Although issues may arise in the first six to eight months — potentially bringing down its initial utilisation rate — it should be smooth sailing by FY2026, says Seet.
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Maybank believes that the utilisation for the first two years will be close to 95%, with rates averaging around US$50,000 per day. This should make a significant contribution to its profitability, he further points out.
“FY2025 should be a good year for MPM as all engines will start firing. We think this is a good time to accumulate MPM with the outlook clear ahead,” he adds.
As at 2.53pm, shares in MPM are trading at an unchanged 5.3 cents.
