Marco Polo Marine - Maybank Research 2024-08-26: A Minor Bump

• Trading at just 7.4x FY24E P/E, Marco Polo Marine (SGX:5LY) remains undervalued vs global/regional peers at 15x and 25x on average.
• Marco Polo Marine’s 3QFY24 revenue rose 4% y-o-y to S$96.5m, while gross profit increased 15.4% y-o-y to S$36.8m, slightly below our expectation mainly due to less 3rd-party repair volume as construction of its CSOV was delayed and this occupied a dry dock. 4Q24 should see some slight improvement, but still weaker than what we had earlier expected.
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Expect 3rd-party repair volumes to rebound in FY25E

• There were fewer 3rd-party repair works in 3QFY24 as one of its dry docks was occupied by its CSOV, construction of which has been delayed. This also caused a shortage of staff to work on 3rd-party repairs. As a result, this is likely to affect 2H profit.
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New vessels – to construct, build & own

• Marco Polo Marine’s subsidiary, PKR Offshore, in Taiwan signed an agreement to charter CTVs in APAC to support windfarm customer Siemens Gamesa’s offshore wind projects in Taiwan and South Korea. We expect Marco Polo Marine to start supplying 2 CTVs by end-2024 and eventually grow to a fleet of 10-15 CTVs within 4- 5 years.
• Marco Polo Marine will also increase its fleet of anchor handlers, which could be used for the O&G and windfarm space. We also expect more shipbuilding jobs for offshore vessels for other customers in FY25E.

Maintain BUY with a lower target price of S$0.08

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Jarick Seet Maybank Research | https://www.maybank-ke.com.sg/ 2024-08-26 SGinvestors.io

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