MARCO POLO: Stock was -20% in 6 weeks. Now it's recovering with 50% upside to Maybank's target price

• Marco Polo Marine's stock fell 21% in a recent 6-week period (from 7. 1 cents to 5.6 cents). Perhaps it was just investors locking in profits. At least Maybank Kim Eng's report today is saying there's no change in Marco Polo's fundamentals. Photo: Marco Polo• When it touched 7.1 cents, Marco Polo's stock was sitting on a whopping 130% gain in 2 years (from 3 cents). So .... some investors just had to harvest the fruits? • Marco Polo has had a resurgence from near-bankrupty just 4-5 years ago. The upturn in fortune is due to to its vessel chartering business serving the oil & gas industry and, notably, the offshore windfarms in Taiwan. Charter rates have never been this good in many years due to an industry shortage of vessels (owing to lack of an appetite by banks to finance newbuilds) while demand is rising. • Other vessel owners such as Nam Cheong and Atlantic Navigation are riding the waves too. Meanwhile, read more about Maybank KE's take on Marco Polo below ....

Excerpts from Maybank KE report
Analyst: Jarick Seet

Marco Polo Marine (MPM SP) -- Opportunity to accumulate

First CTV operational in South Korea

MPM’s subsidiary, PKR Offshore, in Taiwan signed an agreement to charter CTVs in APAC to support windfarm customer Siemens Gamesa’s offshore wind projects in Taiwan and South Korea. 

We expect MPM to start supplying 2 CTVs by end-2024 and eventually grow to a sizable fleet of 10-15 CTVs within 4-5 years.

Each CTV is likely to cost about USD5m and generate up to USD1.7m pa at an average 80% utilisation rate.

We expect gross profit of USD1.1-1.3m/pa/vessel, which would be significant if the fleet size grows.

MPM’s first CTV is already operational in South Korea and it’s likely to add another by the end of 2024.



No delay in CSOV – likely operational in Oct’24

MPM’s CSOV, which is under construction at its shipyard in Batam, is scheduled for delivery in Sep’24 and will be deployed in Taiwan for a Vestas project in early Oct’24.

Management said utilisation is likely to reach >85% in the first 2 years and it has already been pre-booked by Vestas and other customers at average rates higher than we initially forecast.

Share price weakness a golden opportunity    Jarick Seet, analystWe believe MPM has strengthened its strategic relationship with Vestas, especially in Taiwan, and Vestas should remain a core charter partner. 1) potential new vessels with long-term contracts with Vestas, and new clients. 2) completion of construction of CSOV, and 3) strong FY24E earnings growth. Trading at just 7.7x FY24E P/E, MPM remains undervalued vs global/regional peers at 15x and 25x on average.

Full report here