Marco Polo Marine (MPM) reported a 31% YoY fall in revenue to S$21.3m but a 121% rise in net profit to S$9.3m in 2QFY13, such that 1HFY13 net profit accounted for 58% of our full year estimate. Excluding an exceptional gain of S$5.7m, core net profit was about S$3.7m, slightly below our expectations. There was a slowdown in ship repair, and there were no external newbuild orders. However, management expressed the possibility of securing external OSV orders in the coming quarter. Meanwhile, the group is still upbeat on the OSV segment. YTD, MPM’s stock price is up about 11% vs the STI’s 8% gain. We tweak our estimates to account for the lower-than-expected performance by the ship repair division, and as such our fair value estimate drops from S$0.56 to S$0.51. As there is now a less than 30% upside potential for the stock (market cap less than S$150m), we downgrade MPM to HOLD.
Soft 2QFY13 results
Marco Polo Marine (MPM) reported a 31% YoY fall in revenue to S$21.3m but a 121% rise in net profit to S$9.3m in 2QFY13, such that 1HFY13 net profit accounted for 58% of our full year estimate. Excluding an exceptional gain of S$5.7m, core net profit was about S$3.7m, slightly below our expectations. The lower revenue was mainly due to lower contributions from the shipbuilding and repair segment at S$4.8m (-51% QoQ, -82% YoY). Ship chartering revenue (S$16.5m) grew 200% QoQ and 237% YoY, mainly because of BBR, which is now consolidated in MPM’s financials. Gross margin was 42% in 2QFY13, compared to 27% in 2QFY12 and 39% in 1QFY13.
Slow down in ship repair
There was no shipbuilding revenue in the last quarter as revenue from BBR could not be recognized (eliminated from accounting consolidation) since BBR became a subsidiary. There was also no third-party work. However, management expressed the possibility of securing external OSV orders in the coming quarter. Ship repair also saw a slow-down, which management thinks is seasonal.
Supported by ship chartering operations
The group is still upbeat on the outlook for the ship chartering business; currently its entire fleet of offshore vessels is on charter. As mentioned in our earlier reports, we expect the offshore division to be one of the major drivers of growth going forward. Management plans to grow the number of OSVs under BBR from three now to five by the end of this year, and add four more in 2014.
Downgrade to HOLD
YTD, MPM’s stock price is up about 11% vs the STI’s 8% gain. We tweak our estimates to account for the lower-than-expected performance by the ship repair division, and as such our fair value estimate drops from S$0.56 to S$0.51. As there is now a less than 30% upside potential for the stock (market cap less than S$150m), we downgrade MPM to HOLD.
Marco Polo Marine (MPM) reported a 31% YoY fall in revenue to S$21.3m but a 121% rise in net profit to S$9.3m in 2QFY13, such that 1HFY13 net profit accounted for 58% of our full year estimate. Excluding an exceptional gain of S$5.7m, core net profit was about S$3.7m, slightly below our expectations. The lower revenue was mainly due to lower contributions from the shipbuilding and repair segment at S$4.8m (-51% QoQ, -82% YoY). Ship chartering revenue (S$16.5m) grew 200% QoQ and 237% YoY, mainly because of BBR, which is now consolidated in MPM’s financials. Gross margin was 42% in 2QFY13, compared to 27% in 2QFY12 and 39% in 1QFY13.
Slow down in ship repair
There was no shipbuilding revenue in the last quarter as revenue from BBR could not be recognized (eliminated from accounting consolidation) since BBR became a subsidiary. There was also no third-party work. However, management expressed the possibility of securing external OSV orders in the coming quarter. Ship repair also saw a slow-down, which management thinks is seasonal.
Supported by ship chartering operations
The group is still upbeat on the outlook for the ship chartering business; currently its entire fleet of offshore vessels is on charter. As mentioned in our earlier reports, we expect the offshore division to be one of the major drivers of growth going forward. Management plans to grow the number of OSVs under BBR from three now to five by the end of this year, and add four more in 2014.
Downgrade to HOLD
YTD, MPM’s stock price is up about 11% vs the STI’s 8% gain. We tweak our estimates to account for the lower-than-expected performance by the ship repair division, and as such our fair value estimate drops from S$0.56 to S$0.51. As there is now a less than 30% upside potential for the stock (market cap less than S$150m), we downgrade MPM to HOLD.
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