In its recent 1QFY13 results, Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. Looking ahead, the group is expected to capitalise on Indonesia’s growing offshore sector. Indonesia currently has only five AHTS vessels that have at least 8,000 BHP – two belong to Wintermar Offshore (year built: 2011), two belong to Marco Polo Marine (year built: 2011), and the remaining one is more than 30 years old. The group is also still upbeat on the outlook for the ship repair business for the next 12 months. Maintain BUY with S$0.56 fair value estimate, still based on 8x FY13F EPS.
1QFY13 results in line
Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. The fall in revenue was mainly due to slower progress in newbuild orders, resulting in lower ship building revenue. This was offset by higher ship repair turnover, which grew 75.5% YoY to S$8.6m in 1QFY13. Ship chartering revenue fell by 5.2% YoY to $5.5m with the mandatory docking of an offshore vessel. Overall gross profit margin, however, increased from 25% in 1QFY12 to 39% in 1QFY13 with a higher proportion of ship repair revenue (which generally commands higher margins compared to ship building).
Demand for larger AHTS vessels in Indonesia to grow
Indonesia currently has only five AHTS vessels that have at least 8,000 BHP – two belong to Wintermar Offshore (year built: 2011), two belong to Marco Polo Marine (year built: 2011), and the remaining one is more than 30 years old. According to management, there are increasingly more tenders of oil plots in certain areas of Indonesia such as Sulawesi where the waters are rougher and where demand for 8,000 BHP AHTS vessels is likely to be higher.
Ship repair and OSV as growth drivers
The group is still upbeat on the outlook for the ship repair business for the next 12 months. Utilisation rates of its drydocks remain healthy; we believe they may be higher than the industry average of 80+%. Growth is also expected from the offshore support vessel segment – MPM is currently constructing a unit for its fleet, with plans for a second one. Maintain BUY with S$0.56 fair value estimate, still based on 8x FY13F EPS.
Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. The fall in revenue was mainly due to slower progress in newbuild orders, resulting in lower ship building revenue. This was offset by higher ship repair turnover, which grew 75.5% YoY to S$8.6m in 1QFY13. Ship chartering revenue fell by 5.2% YoY to $5.5m with the mandatory docking of an offshore vessel. Overall gross profit margin, however, increased from 25% in 1QFY12 to 39% in 1QFY13 with a higher proportion of ship repair revenue (which generally commands higher margins compared to ship building).
Demand for larger AHTS vessels in Indonesia to grow
Indonesia currently has only five AHTS vessels that have at least 8,000 BHP – two belong to Wintermar Offshore (year built: 2011), two belong to Marco Polo Marine (year built: 2011), and the remaining one is more than 30 years old. According to management, there are increasingly more tenders of oil plots in certain areas of Indonesia such as Sulawesi where the waters are rougher and where demand for 8,000 BHP AHTS vessels is likely to be higher.
Ship repair and OSV as growth drivers
The group is still upbeat on the outlook for the ship repair business for the next 12 months. Utilisation rates of its drydocks remain healthy; we believe they may be higher than the industry average of 80+%. Growth is also expected from the offshore support vessel segment – MPM is currently constructing a unit for its fleet, with plans for a second one. Maintain BUY with S$0.56 fair value estimate, still based on 8x FY13F EPS.
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