Acknowledging that the order book of US$642 million remains “sizeable”, the analysts highlight that contract “wins are key for long-term visibility of earnings” and have therefore kept their "add" call on this counter.
The orderbook is anchored by US$501 million worth of inspection, repair and maintenance (IRM) work across the Middle East, Malaysia and Thailand. Kande and Lim forecast that most of the company’s cable-laying backlog of US$97 million will likely be completed by end-2026 and note that its decommissioning work in Thailand will be ending soon.
With regards to the joint ventures that were recently set up in Taiwan (by subsidiary Mermaid Subsea Services with ATE Energy International) and Equatorial Guinea (with the country’s national oil company GEPetrol), the report notes that these diversifications won’t move the needle too much for orderbook and revenue.
In order for earnings to meaningfully be impacted, CGSI expects Mermaid to bid for other decommissioning projects across Southeast Asia which may result in new contract wins in 2026 but only revenue contributions from late 2026 onwards.
On the back of these developments, CGSI expects its initial net profit forecasts of US$15.2 million (for FY2025) and US$21.4 million (for FY2026) to decrease to US$5.2 million and US$6.2 million respectively, and thereby, the lower target price.
The analysts remain optimistic about new contract wins, because of continuous investment and activity in the offshore sector, as well as the company’s expertise in this domain.
The revised target price is based on 0.9 times of forecasted FY2026 P/B, a 50% discount to peers to account for MMT’s lower ROE. Previously, the duo had changed their valuation method to P/B from P/E to account for limited earnings visibility as the company’s business model is mostly order-book driven.
