“With the full early redemption of the bonds, this non-cash amortisation will largely disappear, resulting in cleaner and stronger profitability in FY2026,” he notes. These losses are likely to taper off significantly from 1HFY2026 onwards.
Given this, the analyst is expecting ASL Marine to post higher margins and double their profits in FY2026. The way he sees it, the growth will be driven by three main factors including its fleet rejuvenation programme that puts it in prime position to capitalise on its the ongoing construction boom.
ASL Marine’s ship repair segment will also benefit from structural drivers such as an ageing global fleet now entering its third to fifth special surveys, as well as a significant expansion in fleet size following the surge in newbuild orders after Covid-19. Finally, ASL’s continued deleveraging efforts will help the company, achieve better margins and profitability, given its high operating leverage, says Yon.
In FY2026 and FY2027, Yon is expecting ASL Marine to report a net income of $28.1 million and $32.4 million respectively, up from FY2025’s earnings of $14.6 million. As it is, the company’s FY2025 bottomline was 272.3% higher from its FY2024 earnings of $3.9 million.
Yon’s earnings estimates are based on a strong tugs/barge construction and repair outlook, improving repair capabilities and margins, and the sale of idle and old vessels, which will reduce the company’s debt, holding costs, interest expense and depreciation while strengthening its balance sheet.
The omission of FV losses since the full redemption of their bonds, as well as “competent and honest businessmen” with strong alignment of interest, are also pluses. ASL Marine’s controlling shareholders own a stake of 62.8%; the analyst believes they will prioritise long-term shareholder value.
The company’s revalued net asset value (RNAV) is also likely to be closer to 30 cents instead of the reported 11.5 cents in FY2025 with vessels and yards that are recorded at cost in their books, says Yon.
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DBS positioned for ‘sustainable profitability’; FY2026 earnings projected to double
DBS Group Research analyst Ho Pei Hwa believes ASL Marine is positioned for “sustainable profitability” and is likely to distribute dividends. This comes after the company’s debt has been reduced to $172.5 million from $423 million in 2019. Its gearing is expected to fall below 0.5 times as well.
Like Yon, Ho also notes the company’s “new growth phase” with its FY2026 earnings projected to double to around $300 million, driven by asset disposals and debt reduction. FY2027 is also likely to see double-digit growth from its shipyard expansion in Batam and Singapore.
“The group’s turnaround is underpinned by a robust ship repair segment — now contributing over 70% of gross profit — and the early upcycle in regional tug and barge markets, while pivoting away from the cyclical and low-margin offshore support vessel (OSV) business,” Ho writes.
“The company plans to divest its remaining OSVs and rejuvenate its tug and barge fleet with over 20 new, greener vessels. These moves are expected to cut costs, improve margins, and unlock up to half of its $132 million structured loan,” she adds.
Based on her estimates, ASL Marine, which is trading at just 7 times its FY2026 P/E and 2 times its P/BV, valuation upside exists. Ho has also pegged a fair value potential at 28 cents to 30 cents if pegged to peer multiples, which is around 9 times to 10 times P/E and a return on equity (ROE) of around 25%.
Shares in ASL Marine closed 0.5 cents higher or 2.33% up at 22 cents on Oct 14.
