Marco Polo Marine
Price target: Maybank Securities ‘buy’ 9 cents
‘Golden opportunity’ to accumulate
Maybank Securities analyst Jarick Seet sees a “golden opportunity” to accumulate shares in Marco Polo Marine amid the counter’s recent share price weakness. Since April, shares in the counter have fallen by some 20% and closed at 6 cents on July 4. Seet has kept his “buy” call and target price at 9 cents.
“Marco Polo Marine’s recent share price weakness does not appear to be related to its fundamentals,” says Seet. “The outlook for Marco Polo Marine has improved as chartering rates continue to rise.”
In his report dated July 5, Seet outlines several positives, including Marco Polo Marine’s crew transfer vessel (CTV) agreement with Siemens Gamesa for the latter’s projects in Taiwan and South Korea.
The agreement, announced on March 21, was signed with the company’s Taiwanese subsidiary PKR Offshore.
Its first CTV was delivered to South Korea this week and is already operational.
“We expect Marco Polo Marine to start supplying two CTVs by end-2024 and eventually grow to a sizeable fleet of 10–15 CTVs within four to five years,” says Seet.
“Each CTV is likely to cost about US$5 million ($6.8 million) and generate up to US$1.7 million per annum (p.a.) at an average 80% utilisation rate,” he adds.
The analyst expects Marco Polo Marine to report a gross profit of around US$1.1 million to US$1.3 million per annum per vessel, which would be “significant” if the fleet grows.
Marco Polo Marine’s commissioning service operations vessel (CSOV) is expected to be operational in October. The CSOV is under construction at its shipyard in Batam and is scheduled for delivery in September. It will be deployed in Taiwan for a Vestas project in early October.
“Management said utilisation is likely to reach [over] 85% in the first two years and it has already been pre-booked by Vestas and other customers at average rates higher than we initially forecast,” says Seet.
“We believe Marco Polo Marine has strengthened its strategic relationship with Vestas, especially in Taiwan, and Vestas should remain a core charter partner,” he adds.
At its current share price, Marco Polo Marine is trading at just 7.7 times its FY2024 P/E, which Seet deems as “undervalued” compared to its global and regional peers, which are trading at 15 times and 25 times respectively on average. —