MPM’s 3QFY13 results were in line with expectations, although y-o-y
and q-o-q comparisons were muddied by significant one-off gains
booked in 3QFY12 and 2QFY13. A steadily-profitable company at its
core with a consistent 15% ROE, MPM is currently trading at 0.8x P/BV.
With a strong FY14F expected after its current vessel charters are
renewed at higher market rates, we maintain a BUY with a SGD0.61 TP
* 3QFY13 results comparisons marred by one-off gains in prior
Marco Polo Marine (MPM) recorded 3QFY13
revenue of SGD28.6m and net profit of SGD5.7m, of which SGD4.3m
was attributable to shareholders (ie. PATAMI). Earnings were down 52%
y-o-y, but 3QFY12 saw a SGD3.6m one-off gain relating to foreign
exchange reversals (See Figure 1 for details.)
MPM enjoyed robust profitability with its gross
margin at 36%, EBITDA margin at 44% and net margin at 20%. These
are sustainably high numbers, reflecting a lack of one-offs in this quarter.
* Stronger quarters ahead with new Offshore Support Vessels (OSVs)
and renewed charters
We expect MPM’s growth to accelerate in FY14
i) new OSVs join the fleet, the latest being MP Prevail which was
delivered in July, and
ii) existing charters expire and are reset to the
33%-higher current market rate.
* High-margin, steadily profitable company at 0.8x P/BV
At its core,
MPM is a high-margin business which has been consistently profitable,
delivering 16-23% in ROE for the last five years through the global
financial crisis. Future operations should remain strong as the
Indonesian offshore oil & gas industry continues to grow. We believe the
stock is a steal, as it is currently trading at 0.8x P/BV.
* Maintain BUY with TP of SGD0.61
We continue to like MPM for its :
exposure to cabotage-protected Indonesian offshore oil & gas,
iii) visible growth, and
iv) attractive valuations.
risks continue to be tug & barge fleet utilisation and operational
, while potential shipbuilding contracts provide upside. We
maintain our BUY rating with a TP of SGD0.61 based on 8x FY14F EPS
. (Read Report)
Source : DMG & Partners Research
Labels: Marco Polo Marine, Offshore Marine Sector