Maybank Securities’ Jarick Seet has increased his target price to 13 cents, his second increase in less than a month, as the latest contract adds $50 million to Marco Polo Marine’s shipbuilding revenue per annum (p.a.). The contract will also add about $4 million in profits p.a. at a net margin of 8%, Seet notes.
In addition to his higher target price, Seet has also increased his net profit estimates for FY2026 and FY2027 by 13.2% and 11.7% respectively. His new target price is based on a higher FY2026 P/E of 14 times, from 13.5 times previously.
To this end, Seet believes Marco Polo Marine’s financials in FY2026 will outperform its 1HFY2025 numbers. The company’s 4QFY2025 is also likely to see growth.
In addition, the analyst sees that fleet expansion will “significantly enhance” Marco Polo Marine’s earnings per share (EPS) in FY2027 to FY2030 but will wait for confirmation before factoring it into his forecasts.
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Seet last raised his target price to 11 cents on Oct 24, up from 9 cents before.
CGSI’s Meghana Kande and Lim Siew Khee have also increased their target price to 14 cents from 10 cents previously due to the “sizeable” newbuild order.
The analysts foresee that construction could begin around late 2026 with the bulk of the work being completed in 2029.
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Assuming that the company will recognise revenue progressively with a gross margin of 10%, Kande and Lim estimate that the contract will lift Marco Polo Marine’s FY2027 net profit by $3 million.
“In our view, Marco Polo Marine’s other newbuild projects for its own fleet should proceed as planned, given its ample workshop capacity. Marco Polo Marine is currently building an anchor handling tug supply (AHTS) vessel expected to be completed by August 2026 and will commence its second commissioning service operation vessel (CSOV) in mid-2026,” they note.
In 2HFY2025, Kande and Lim expect Marco Polo Marine to deliver a net profit of $13 million, 30% higher h-o-h, due to better chartering revenues from contribution from its first CSOV. “We think its shipyard saw resilient utilisation from strong repair demand and new drydock four, despite limited newbuild work affecting revenues.”
The analysts’ new target price is based on an FY2027 P/E of 13 times, from 10 times previously, representing a 25% premium to its peers in light of the company’s 30% net profit compound annual growth rate (CAGR) from FY2025 to FY2027.
UOB Kay Hian’s Heidi Mo and John Cheong have increased their target price on Marco Polo Marine by 57% to 13.8 cents, from 8.8 cents previously.
Assuming that the company accounts for the contract by percentage of completion, Mo and Cheong believe the contract is likely to contribute an additional $50 million to Marco Polo Marine’s revenue, which is “material” given the company’s historical shipyard revenues of between $40 million to $60 million.
The analysts also expect the contract to bring in higher margins as due to the engineering complexity and limited competition when it comes to building high-spec research vessels. With Marco Polo Marine’s in-house capabilities and proven track record, Mo and Cheong expect the company’s shipbuilding margins to increase toward the upper end of its historical range of 8% to 12%.
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The analysts also like this project as it is fully self-financed, thereby eliminating leverage risk. In their view, the progressive milestone payments will “drive healthy operating cash flows throughout the four-year construction period, easing working capital requirements”.
“This enhances liquidity for reinvestment in strategic growth areas, such as offshore wind vessel expansion, without relying on external financing or equity dilution,” they note. “This positions Marco Polo Marine for sustainable, organic expansion while maintaining a healthy balance sheet.”
In addition to their higher target price, which is pegged to an FY2026 P/E of 16 times from 11.3 times, Mo and Cheong have also lifted their revenue forecasts for FY2026 to FY2027 by 9% and 6% respectively after factoring in the annual shipbuilding contributions from the landmark project win.
Consequently, their FY2026 and FY2027 earnings estimates have also increased by 11% and 8% respectively.
Finally, RHB Bank Singapore’s Alfie Yeo has lifted his target price estimate to 12.2 cents from 10 cents previously. Like Maybank’s Seet, this is Yeo’s second increase in less than a month. Yeo had raised his target price estimate to 10 cents on Oct 22 from 8.5 cents before.
This time, Yeo expects to see higher revenue and earnings base but with lower margins from FY2026. Revenue is likely to grow by 27% y-o-y next year, he says.
Yeo sees that the latest contract will contribute significantly to Marco Polo Marine’s revenue averaging at about $50 million p.a. over the next four years, leading to 27% increase in its FY2026 revenue.
Yeo also expects Marco Polo Marine’s FY2027 revenue to grow by 26% to reflect higher revenue recognition from the new contract.
That said, the analyst expects margins to lower as the company’s shipbuilding segment has comparatively lower margins than its ship chartering business.
“With the higher contribution of shipbuilding revenue going forward, we have lowered our gross margins from 43% to 38%. EBIT margin is slightly lower from 25% to 22%, while net margin is lowered from 21% to 18%,” he writes. “Nonetheless, additional profits have led us to raise FY2026 and FY2027 earnings and target price by 14%, 11%, and 22%.”
Shares in Marco Polo Marine closed 0.1 cents lower or 0.92% down at 10.8 cents on Nov 18.
