While the analyst expects Marco Polo Marine’s 3QFY2025 results to improve sequentially, it is likely to be softer on a y-o-y basis due to weaker utilisation rates for its vessels.
The company’s new commissioning service operation vessel (CSOV) also won’t commence its operations until 3QFY2025, and its contributions are expected to come into fruition at the end of the quarter, he points out.
However, upfront costs were absorbed into 1HFY2025’s results. In addition, lower third-party charting has also reduced ship-chartering revenue, mitigated by higher utilisation of its existing fleet.
Lastly, shipyard repairs were also affected by the ongoing construction of the CSOV in 1HFY2025, which reduced capacity for the other projects.
Oil prices have also trended down in the past few months, leading to analysts to expect utilisation to be impacted.
“Through our channel checks, we understand that rates are still holding up and rising slightly,” analysts say, adding that they expect utilisation to pick up in the fourth quarter.
Expecting that MPM’s performance will pick up in 4QFY2025, analysts predict that management will continue to pivot to offshore wind farms from oil and gas.
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The company previously pivoted to serve offshore wind farms in Taiwan, and aims to grow in this space as well as chartering vessels to other renewable operators in the region.
With these factors in mind, Seet believes Marco Polo Marine’s earnings for the 2HFY2025 should be stronger compared to its performance in the 1HFY2025.
The analyst’s new target price is based on a higher price-to-earnings (P/E) ratio of 10 times, with core net profit FY2025 estimated to be $26 million.
Marco Polo Marine was previously trading at 6.9 times FY2025 P/E with a forecast of FY2023 to FY2026 NPAT CAGR of 26.5% from rising utilisation and charter rates.
“We believe Marco Polo Marine is significantly undervalued,” says Seet.
As at 4.43pm, shares in Marco Polo Marine are trading 0.1 cent higher or 1.79% up at 5.7 cents.
