Introduction

In the ever-evolving realm of marine logistics, Marco Polo Marine stands as a beacon of integration and innovation. Their multifaceted approach, encompassing ship chartering, building, and maintenance, sets them apart in the regional waters of Southeast Asia.

Company Overview

Marco Polo Marine, a stalwart in the industrial sector, is recognized for its comprehensive marine logistics solutions. With a focus on offshore support vessels (OSVs) and a strategically located shipyard in Batam, Indonesia, the company is well-positioned to capitalize on the maritime industry’s cyclical nature.

Financial Performance: FY24 Insights

Marco Polo Marine’s FY24 results have surpassed expectations, with core earnings reaching S\$26 million, marking a 4% increase year-on-year. The results exceeded forecasts by 9%, primarily due to robust margins during the offshore upcycle. Although revenue dipped by 3% due to lower ship repair volumes, the company managed to offset this with elevated ship chartering revenue, fueled by increased charter rates.

Future Prospects and Strategic Developments

Looking ahead, Marco Polo Marine anticipates a 9-16% boost in earnings for FY25-27, driven by the introduction of a fourth dry dock, sustained higher charter rates, and contributions from new commissioning service operation vessels (CSOVs). The company maintains a ‘BUY’ recommendation, with a revised target price of S\$0.072.

Detailed Financial Results

Despite a 12.9% year-on-year decline in 2HFY24 revenue to S\$62 million, Marco Polo Marine reported a gross profit of S\$48.5 million for the full year, with an improved gross margin of 39.3%. The company’s core profit, adjusted for unrealized exchange losses and provisions for liquidated damages, stood at S\$26.3 million, representing a 4.4% increase from the previous year.

Operational Highlights

Shipyard Operations

The shipyard segment faced challenges due to the CSOV construction, which impacted volumes. Nonetheless, shipyard utilization remained high at 91% for FY24. The addition of a fourth dry dock is expected to enhance capacity by 25%, paving the way for revenue recovery in FY25.

Ship Chartering

Ship chartering revenue for 2HFY24 fell by 6% to S\$29 million, reflecting a normalization in fleet utilization. However, for the full year, this segment saw a 9% increase in revenue to S\$72 million, driven by higher charter rates. The company anticipates a further 5-10% increase in charter rates for FY25.

Strategic Outlook and Recommendations

The company’s strategic focus on enhancing its dry dock capacity and optimizing vessel utilization underpins its growth trajectory. Marco Polo Marine’s strong net cash position of S\$36 million provides a solid foundation for future expansion. The revised earnings forecast for FY25/26 reflects a 11-13% increase, bolstered by higher charter rates and CSOV utilization.

The maintained ‘BUY’ recommendation, with an elevated target price, is underpinned by a projected 9.5x FY25F PE, reflecting optimism in the company’s strategic initiatives and market positioning.

Conclusion

Marco Polo Marine’s strategic investments and prudent financial management position it well for sustained growth. As the company navigates the complex waters of marine logistics, its robust operational framework and strategic foresight promise a prosperous journey ahead.