UOB Kay Hian Private Limited Wednesday, 30 April 2025

Marco Polo Marine (MPM), an integrated marine logistics group, is poised for growth, backed by strategic vessel deployments and favourable market conditions in the offshore support vessel (OSV) sector. The company, known for its ship chartering of OSVs in regional waters and shipbuilding/maintenance services from its Batam shipyard, maintains a BUY rating with a target price indicating significant upside potential.

Marco Polo Marine (MPM SP): Company Snapshot and Investment Thesis

Marco Polo Marine operates within the Industrials GICS sector, trading under the Bloomberg ticker MPM SP.
Key Stock Data:

• Share Price: S\$0.042
• Target Price: S\$0.072
• Upside Potential: +71.8%
• Shares Issued: 3,753.6 million
• Market Cap: S\$157.7 million (S\$), S\$120.5 million (US\$)
• 3-Month Avg Daily Turnover: US\$0.5 million
• 52-Week High/Low: S\$0.072 / S\$0.033
• FY25F NAV/Share: S\$0.06
• FY25F Net Cash/Share: S\$0.02

Major Shareholders:

• Lee Family: 22.6%
• Apricot Capital: 16.2%
• Penguin International: 8.1%

Price Performance (%):

• 1 Month: (12.5)
• 3 Month: (22.2)
• 6 Month: (26.3)
• 1 Year: (37.3)
• YTD: (22.2)

The analysts maintain a BUY recommendation, citing MPM’s strategic positioning, particularly with its recent CSOV deployment and strong regional demand for support vessels.

Strategic CSOV Deployment Signals Strong Demand

A significant development is the maiden deployment of Marco Polo Marine’s commissioning service operation vessel (CSOV), the MP Wind Archer.

• Siemens Charter: The CSOV commenced its first charter with Siemens Gamesa Renewable Energy (Siemens) from mid-April 2025 to August 2025. This contract is for offshore wind commissioning works at the Hailong Wind Farm project and includes an option to extend until September 2025.
• Vestas Framework Agreement: Importantly, the three-year framework agreement signed in November 2023 between MPM’s Taiwan subsidiary, PKR Offshore Co (PKRO), and Vestas Taiwan Co (Vestas) remains effective. This agreement is based on a minimum annual utilisation commitment and will start upon the first deployment by Vestas. Management indicated the Siemens charter aligns with operational needs and ensures optimal CSOV utilisation.
• Market Strength Indicator: Securing the short-term Siemens charter during the CSOV’s availability highlights the robust demand for support vessels in the Asia Pacific region. Furthermore, short-term charters typically command premium rates compared to long-term agreements, which is expected to positively impact MPM’s revenue starting from the second half of FY25 (mid-Apr 25 onwards).

Expanding Horizons: CTVs and Regional Growth

MPM’s expansion isn’t limited to its CSOV. The company is actively growing its presence in the crew transfer vessel (CTV) segment, particularly in Taiwan.

• Taiwan Deployments: This year, MPM has deployed its CSOV and two new CTVs in Taiwan. A third new CTV is scheduled for deployment in early May 2025.
• Siemens CTV Agreement: Beyond the Vestas CSOV agreement, PKRO has also secured an Asia-Pacific CTV framework agreement with Siemens covering projects in Taiwan and Korea from 2024-26, with an extension option until 2030.
• Growth Drivers: This demand stems from significant offshore wind investments in Taiwan and Korea as both nations pursue net-zero carbon emission goals. As these markets expand their offshore wind capacity, MPM is well-positioned to secure further projects, enhancing its established track record.

Favourable Market Dynamics: Tight OSV Supply Boosts Rates

The traditional OSV market continues to benefit MPM due to supply constraints.

• Supply Constraints: Tight vessel supply, limited shipyard capacity, scarce financing, and few newbuilds are keeping charter rates elevated. As of December 2024, the global orderbook was minimal, comprising just 40 anchor handlers and 30 platform supply vessels, with delivery times around two years.
• Market Opportunity: This creates a strong near-to-medium term market for vessel owners like MPM. The company operates a fleet of 14 OSVs with an average age of 10 years.
• Firm Day Rates: Recent checks show day rates for 5k-bhp anchor handling tug supply vessels in Southeast Asia remain strong at US\$8,395, representing a 5% increase from 2024 and a 22% increase from the 2023 average.

Financial Health and Valuation

MPM exhibits strong financial management and trades at an attractive valuation.

• Net Cash Position: The company maintained a robust net cash position of S\$36 million at the end of FY24, equivalent to S\$0.009 per share. This provides a solid buffer and supports the valuation.
• Funding Flexibility: MPM can utilize its cash reserves or explore various funding options, including partnerships for co-owning vessels, to facilitate fleet expansion.
• Valuation: The BUY rating is maintained with an unchanged target price of S\$0.072. This target is based on 9.5x FY25F Price-to-Earnings (PE), which is +1 standard deviation above its historical three-year PE range. The company currently trades at an attractive 5.5x FY25F PE.
• Earnings Forecasts: No changes have been made to earnings forecasts.

KEY FINANCIALS

Source: Marco Polo Marine, Bloomberg, UOB Kay Hian

Detailed Financial Projections

The following tables provide a detailed look into the projected financial performance and position of Marco Polo Marine for the upcoming fiscal years.
PROFIT & LOSS

BALANCE SHEET

CASH FLOW

KEY METRICS

Source: Marco Polo Marine, Bloomberg, UOB Kay Hian

Potential Catalysts and Outlook

Several factors could positively influence Marco Polo Marine’s share price:

• Higher-than-anticipated ship charter rates and vessel utilisation levels.
• Securing new ship chartering contracts.
• An increase in the value of repair projects undertaken during the year.

Analyst Viewpoint

Analysts Heidi Mo and John Cheong maintain a positive stance on Marco Polo Marine. The company is well-positioned to benefit from high charter rates in both the traditional OSV and burgeoning offshore wind vessel markets. Its strategic focus on growth, particularly in Taiwan and Korea, coupled with a healthy balance sheet and attractive valuation, underpins the maintained BUY recommendation and S$0.072 target price. The ability to secure short-term, premium-rate charters for its new CSOV further reinforces the positive outlook and strong market demand.