Firstly, Mo believes ASL’s repairs segment will drive the shipyard’s next phase of growth. On the micro level, she notes that the ship repairs segment has grown at a compounded annual growth rate (CAGR) of around 3% since 2019, highlighted by a 7% y-o-y increase in 2025 repair yard visits.
The analyst backs up her argument and shares sector trends that would support repairs growth. These include older vessels requiring around 20% more work than earlier survey intervals when entering their 15-year special surveys. Vessel surveys are mandatory, periodic inspections by classification societies to ensure ships remain structurally sound and meet safety standards.
Furthermore, she points out that decarbonisation and retrofit requirements are compelling owners to undertake drydocking regardless of freight or commodity price cycles.
For Mo, these factors reinforce the repairs business as a “recurring, higher margin” earnings pillar that is less prone to economic cycles and volatility.
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Secondly, Mo believes ASL’s charter business provides a “high quality” and relatively defensive earnings base. She writes that ASL’s near-term earnings is anchored by its charter business with $82 million of infrastructure-linked chartering contracts providing strong earnings visibility. According to Mo, she expects Singapore’s multi-decade marine projects, including Tuas Mega Port and coastal protection works, to drive sustained demand for tugs, barges, crane barges and dredging-related assets, with ASL presumably working on some of these projects.
With regards to the offshore oil and gas (O&G) sector, Mo thinks that this segment provides upside. She notes that since ASL has transformed its business to move away from “speculative” newbuilds that serve O&G to its current focus on repairs and chartering, any re-entry into O&G would represent bonus earnings.
Finally, Mo believes in ASL’s strengthened balance sheet, after nearly a decade of paring debt. Borrowings, which was once as high as $592 million in 2016, stood at less than $179 million as at 30 Jun 2025.
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Due to the combination of stronger revenue and lower debt burden, ASL generated $46m in operating cash flow, enabling the company to resume dividends for the first time in nearly a decade. Mo is optimistic that as the company continues to deleverage, more free cash flow will be generated which can provide higher shareholder returns via dividends, presumably all the way into FY 2027.
Based on a valuation of 11.6 times forecasted P/E in 2026, Mo sees a nearly 30% upside in the counter at its Jan 12 closing price of 27 cents which is only nine times forecasted P/E.
Shares in ASL Marine were up 1.5 cents, or 5.6%, to 28.5 cents at around 11.45 am on Jan 13.
