MARCO POLO MARINE LTD. (SGX:5LY)
Marco Polo Marine - Tides Turning In Favor Of Marco Polo
- MarcoPolo Marine (SGX:5LY) primarily engages in ship chartering and shipyard businesses. It has a fleet of 37 OSVs, tugboats and barges for charter. MarcoPolo Marine does ship repair and shipbuilding works at its 34 ha Batam shipyard. Revenue from Ship chartering/Shipyard segments are split 44%/56% each.
Promising potential in Taiwan windfarm market.
- MarcoPolo Marine will be increasing the no of vessels chartered to Taiwan from 2 to 4 end 2022 as Taiwan ramps up its offshore wind capacity. Taiwan is aiming for 15GW by 2035. Local content requirements (i.e. Vessels’ age < 12 years old, Ban of China-built vessels) are raising the barriers to entry for competitors. Reflagging exercise will give MarcoPolo Marine an edge to securing more contracts as well. Windfarm projects offer 15-20% price premium to O&G projects.
Enjoying higher charter and utilization rate.
- Brent crude oil is up 54.8% year-to-date hovering above US$70/barrel as at 28 Dec. Oil majors (i.e. TotalEnergies, ExxonMobil etc) have preliminary plans to increase CAPEX by 8-25% to capitalize on the current robust price environment.
- On the other hand, competing interests for OSVs from offshore renewables and decommissioning projects are snapping up available vessels in the market. With ~50% of MarcoPolo Marine’s vessels due for charter renewal in 1H22, further upside in charter rates will help with revenue growth and margin expansion.
Boosted capacity for growing ship repair works.
- Expansion of MarcoPolo Marine’s dry dock 1 is 54% done and due for completion by Jan 22. This will contribute an additional ~20% capacity which allows the Group to take on additional works. MarcoPolo Marine continues to receive more installation works for ballast water management for the next 2 years as deadline approaches. Utilization rate of its 3 dry docks is ~86%.
- We initiate coverage on MarcoPolo Marine with a target price of S$0.032, pegging it to 8.0x FY22E EV/EBITDA, median for the offshore sector and trading closely to that of its closest comparable, ASL Marine (SGX:A04) (8.0x). MarcoPolo Marine's Share Price is currently trading at forward P/E of 23.2x and 17.3x for FY22E and FY23E respectively.
- See
- See the report attached below for complete analysis on MarcoPolo Marine (SGX:5LY).
Lim Shu Rong
SAC Capital Research
|
https://www.saccapital.com.sg/
2022-01-04
SGX Stock
Analyst Report
0.032
SAME
0.032
