Date: September 30, 2024
Broker Name: CGS-CIMB Securities

Orderbook at an 11-Year High

As of 2Q24, Mermaid Maritime’s (MMT) orderbook reached an impressive US$976 million, the highest in 11 years. This substantial orderbook increase is driven by new decommissioning projects and the renewal of Inspection, Repair, and Maintenance (IRM) contracts, which have been secured at higher values.

Strong Fleet Utilization

MMT’s fleet utilization has dramatically improved, reaching over 80% in the first half of 2024. This represents a significant jump from just 50% in 2021. The limited number of newbuild vessels over the past decade has resulted in a tight global vessel supply, contributing to the higher utilization rates.

Impressive Profit Growth Forecast

The company is expected to achieve net profit growth of 22% in FY24F and 70% in FY25F. This growth is attributed to the successful execution of larger-scale decommissioning projects and high-margin cable-lay orders, which are set to provide strong revenue streams for MMT in the upcoming years.

Attractive Valuation

Despite its robust performance and strong growth prospects, MMT’s stock currently trades at a 33% discount compared to its global peers, based on the 2025 forecasted price-to-earnings ratio (P/E). The stock is trading at a P/E of 11x for FY25F.

Analyst Recommendation

The report initiates coverage on Mermaid Maritime with an “Add” call, suggesting a target price of S$0.20, based on 11x 2025 forecasted P/E. This recommendation reflects the company’s potential for continued growth in the mid to long term, driven by its high orderbook and improved fleet utilization.