Maybank Securities’ analyst Jarick Seet has kept his “buy” call on Marco Polo Marine 5LY at a lowered target price of 8 cents from 9 cents previously following the company's 3QFY2024 ended June results.
Seet notes that Marco Polo’s revenue of $96.5 million and gross profit of $36.8 million came in slightly below his expectations, mainly due to less third-party repair volume due the extended occupying of a dry dock from delayed construction of a commissioning service operation vessel (CSOV).
He adds that while the delay is likely to affect Marco Polo’s 2HFY2024 profit, these issues should be resolved by end-FY2024 in September.“We view this CSOV delay as a minor hiccup to its longer-term growth cycle,” he adds.
In FY2025, the company should see a full ramp-up of shiprepair volumes, especially with expansion of its fourth dry dock, which Seet estimates could see revenue rise 25%, with recognition from 2HFY2025 onwards.
Meanwhile, Marco Polo’s subsidiary PKR Offshore signed an agreement to charter crew transfer vessels (CTVs) in the Asia Pacific (APAC) to support wind farm company Siemens Gamesa’s offshore wind projects in Taiwan and South Korea.
“We expect Marco Polo to start supplying two CTVs by end-2024 and eventually grow to a fleet of 10 to 15 CTVs within four to five years,” writes Seet.
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The company will also increase its fleet of anchor handlers, which the analyst notes could be used for the oil and gas (O&G) and windfarm space.
“We also expect more shipbuilding jobs for offshore vessels for other customers in FY2025.”
Overall, Seet sees that Marco Polo should see a slight improvement in the 4QFY2024, albeit weaker than expected.
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With this, the analyst has cut his FY2024 and FY2025 profit after tax and minority interests (patmi) forecasts by 11.5% and 12.1% respectively.
He concludes: “We believe Marco Polo has strengthened its strategic relationship with Vestas, especially in Taiwan, and Vestas should remain a core charter partner.”
Key catalysts noted by him include potential new vessels with long-term contracts with Vestas, and new clients, the completion of construction of its CSOV and lastly, strong FY2025 earnings growth.
As at 12.15 pm, shares in Marco Polo are trading at 0.1 cent lower or 1.92% down at 5.1 cents.
