RHB Group Research analyst Jarick Seet has kept his “buy” rating on Marco Polo Marine (MPM) with the same target price of 4 cents, in light of the company’s increased proclivity towards expanding and diversifying towards a greener initiative.
According to Seet, MPM has been actively looking into renewable energy projects– a step beyond the oil and gas industry. As of 1QFY2022 ended September 2022, 20% of MPM’s utilised vessels are working on offshore windfarm projects in Taiwan.
“We believe that MPM will expand its operations in Taiwan, and will likely look to double its chartering fleet in this space by end 2QFY2022 – then have at least 50% of its fleet servicing the renewable energy sector by 2QFY2023,” says the analyst.
A key highlight from MPM is also that a MP S80-20 Service Operation Vessel (SOV) and a S83-21 Commissioning Service Operation Vessel (CSOV) are expected to service the global offshore wind farm market, in addition to being the first SOV and CSOV designed in Asia, writes the analyst.
“The SOV will function as a mother ship for wind turbine technicians performing maintenance and service work at offshore wind farms, while the CSOV is designed to support commissioning works during the construction of offshore wind farms, as well as their maintenance operations,” explains Seet.
The push for a greater green initiative on part of MPM is clear with the acquisition of Taiwan-based PKR Offshore, that will add two offshore supply vessels (OSVs) to the group, boosting MPM’s fleet size to 13 OSVs. Of the 13, four will service the windfarm sector in Taiwan, according to Seet.
See also: RHB initiates coverage on CSE Global with ‘buy’ call with TP of 58 cents.
Moreover, MPM’s vessels will be designed to be equipped with greener features, such as hybrid battery-based energy storage systems, enhanced automation and drone-equipped capabilities. The use of these green features stands to cut the amount of fuel consumption and emissions by up to 15-20%, as compared to that of a non-diesel electric hybrid vessel, writes Seet.
As crude oil prices have been recovering strongly these days, MPM is seeing an improvement in ship charter utilisation rates and shipyard operations. “With the Covid-19 situation in Taiwan improving, this will likely speed up the progress of its winning renewable energy projects,” Seet says. “We also believe that the continued recovery will be positive for MPM.”
As at 2.44pm, shares in MPM are trading flat at 2.9 cents with an FY2022 P/B ratio of 0.8x.
