Marco Polo Marine (MPM) reported a 26.8% rise in revenue to S$24.6m and a 8.5% increase in net profit to S$4.4m in 1QFY12, within ours and the street’s expectations. The group’s shipyard operations now accounts for 76.4% of total revenue with correspondingly lower contributions from ship chartering as associate BBR has been assuming more of the chartering business. However, BBR’s profits were impacted by one-off forex losses in 1QFY12. The group’s businesses are growing steadily, and the stock currently has an upside potential of about 18% based on our fair value estimate of S$0.43, but this is within our 30% range for small cap stocks. Hence we maintain our HOLD rating.
1QFY12 results in line.Marco Polo Marine (MPM) reported a 26.8% rise in revenue to S$24.6m and a 8.5% increase in net profit to S$4.4m in 1QFY12, accounting for 24% and 25% of our full year estimates, respectively. Net profit was also within the street’s expectations, accounting for 23% of Bloomberg’s consensus estimate of S$18.7m.
Shipyard’s revenue share increasing.Ship building and repair accounted for 76.4% of total revenue in 1QFY12 compared to 61.3% in 1QFY11 and 68.4% in 4QFY11. Correspondingly, ship chartering accounted for a smaller share (S$5.8m turnover vs. S$7.5m in 1QFY11). This is because MPM’s 49%-owned Indonesian associated company, BBR, has been assuming more of the ship chartering business due to the cabotage rule in Indonesia. Excluding JV vessels with Glencore, we estimate that BBR’s fleet comprises of 35 pairs of tugs and barges while MPM has about 10 pairs, besides its offshore support vessels.
BBR’s profits impacted by forex movements.MPM saw a S$265k share of loss from BBR and this was mainly due to unrealized foreign exchange losses of S$2.4m that resulted from the weakening of the Indonesian rupiah against the USD in the last quarter. The foreign exchange movements had negatively impacted BBR’s vessel loans which were mainly denominated in USD. Stripping away the forex loss, BBR would have posted a profit of S$1.8m and MPM’s share of BBR profit would have been S$0.9m.
Healthy charter rates.Looking ahead, MPM expects the ship repair business to remain healthy, and there should be additional contributions as well from its third dry dock that was completed and commissioned in Jan this year. Meanwhile, the charter rates for tugs and barges continue to be stable, though those of offshore support vessels seem to be on a gradual uptrend. There is currently an upside potential of about 18% based on our fair value estimate of S$0.43, but this is within our 30% range for small cap stocks. Hence we maintain our HOLD rating on the stock.
Shipyard’s revenue share increasing.Ship building and repair accounted for 76.4% of total revenue in 1QFY12 compared to 61.3% in 1QFY11 and 68.4% in 4QFY11. Correspondingly, ship chartering accounted for a smaller share (S$5.8m turnover vs. S$7.5m in 1QFY11). This is because MPM’s 49%-owned Indonesian associated company, BBR, has been assuming more of the ship chartering business due to the cabotage rule in Indonesia. Excluding JV vessels with Glencore, we estimate that BBR’s fleet comprises of 35 pairs of tugs and barges while MPM has about 10 pairs, besides its offshore support vessels.
BBR’s profits impacted by forex movements.MPM saw a S$265k share of loss from BBR and this was mainly due to unrealized foreign exchange losses of S$2.4m that resulted from the weakening of the Indonesian rupiah against the USD in the last quarter. The foreign exchange movements had negatively impacted BBR’s vessel loans which were mainly denominated in USD. Stripping away the forex loss, BBR would have posted a profit of S$1.8m and MPM’s share of BBR profit would have been S$0.9m.
Healthy charter rates.Looking ahead, MPM expects the ship repair business to remain healthy, and there should be additional contributions as well from its third dry dock that was completed and commissioned in Jan this year. Meanwhile, the charter rates for tugs and barges continue to be stable, though those of offshore support vessels seem to be on a gradual uptrend. There is currently an upside potential of about 18% based on our fair value estimate of S$0.43, but this is within our 30% range for small cap stocks. Hence we maintain our HOLD rating on the stock.
No comments:
Post a Comment