Marco Polo Marine (MPM): 2HFY25F Growth Expected – CGS International Report

CGS International

May 15, 2025

Marco Polo Marine: Riding the Offshore Wind Wave with Margin Expansion

Marco Polo Marine (MPM) is strategically positioning itself to capitalize on the burgeoning offshore wind sector, with a focus on higher-margin chartering activities. Despite a slight dip in first-half earnings, the company’s prospects appear bright, fueled by new vessel deployments and a potential second CSOV on the horizon.

1HFY9/25 Performance: Margin Expansion a Silver Lining

• MPM reported a core net profit of S\$9.6m for 1HFY9/25, a 14% year-over-year decrease, but in line with expectations, representing 38% of the FY25F estimate. [[1]]
• Revenues for the same period declined by 14% yoy to S\$52.7m, primarily due to the absence of third-party charter revenue in Taiwan (estimated at c.S\$7.5m) and subdued shipbuilding activity. [[1]]
• Improved charter rates in Southeast Asia and stronger fleet utilization (68% in 1HFY25 vs. 60% in 1HFY24) partially offset the revenue decline. [[1]]
• Gross margin expanded by 5% pts yoy to an impressive 41%, exceeding the FY25F forecast of 39.5%, driven by a favorable revenue mix favoring higher-margin chartering. [[1]]

Growth Drivers: Chartering and CSOV Deployment

• MPM’s new commissioning, service, and operations vessel (CSOV) commenced operations for Siemens Games in April 2025, securing day rates of approximately US\$65,000. [[1]]
• This rate is approximately 40% higher than the three-year charter with Vestas, scheduled to begin in Oct 2025F. [[1]]
• Two new crew transfer vessels (CTVs) are slated for deployment in 2HFY25F, with one already operating in Taiwan. [[1]]
• These additions are expected to compensate for reduced third-party chartering revenues in Taiwan booked in FY24, potentially driving a 15% yoy growth in chartering revenues for FY25F. [[1]]
• MPM is actively pursuing a second CSOV, potentially ready by late-2027F if construction commences by the end of 2025F. [[1]]
• The company intends to divest lower-value tugs and barges catering to other industries, reinvesting in its expanding offshore wind business. [[1]]

Shipyard Activity: Muted Outlook

• MPM’s yard utilization decreased to 78% in 1HFY25 from 89% in 1HFY24. [[1]]
• Management anticipates that macroeconomic uncertainty could further dampen customer sentiment in FY25F, despite ongoing newbuild inquiries. [[1]]

Investment Thesis: Reiterate Add with a Lower Target Price

• The net profit estimate for FY25F remains unchanged, but FY26F/27F estimates have been lowered by 4.3%/7.5% to account for a slower yard recovery. [[1]]
• This is partially mitigated by increased FY25F-27F gross margins of 41.5-42%, supported by improved chartering activity. [[1]]
• The target price (TP) has been reduced to S\$0.06, primarily due to industry valuation de-rating, with a target multiple of c.7x 2026F P/E (from 9x), aligning with peers. [[1]]
• The “Add” rating is reiterated, based on an anticipated net profit CAGR of 18% over FY24-27F. [[1]]
• Key catalysts for re-rating include securing a contract for a second CSOV and achieving higher-than-expected fleet utilization. [[1]]
• Downside risks include lower-than-expected yard utilization and potential delays in offshore wind projects affecting vessel demand. [[1]]

Key Financials and Ratios

• Current Price: S\$0.044 [[1]]
• Target Price: S\$0.06 [[1]]
• Previous Target: S\$0.08 [[1]]
• Up/downside: 36.4% [[1]]

Shareholder Structure

• Lee Family: 22.6% [[1]]
• Apricot Capital Pte Ltd: 16.5% [[1]]
• Penguin International Limited: 8.1% [[1]]

Financial Performance Breakdown

• Revenue (S\$m): [[1]]
  • 2023: 127.1
  • 2024: 123.5
  • 2025F: 128.2
  • 2026F: 152.6
  • 2027F: 164.3
• Operating EBITDA (S\$m): [[1]]
  • 2023: 43.30
  • 2024: 42.70
  • 2025F: 44.18
  • 2026F: 53.44
  • 2027F: 59.42
• Net Profit (S\$m): [[1]]
  • 2023: 22.58
  • 2024: 21.70
  • 2025F: 25.07
  • 2026F: 32.01
  • 2027F: 35.77
• Core EPS (S\$): [[1]]
  • 2023: 0.006
  • 2024: 0.007
  • 2025F: 0.007
  • 2026F: 0.009
  • 2027F: 0.010

Segmental Performance

• Ship Chartering Revenue: [[2]]
  • 1H25: S\$32.0m
  • 1H24: S\$32.9m
  • FY25F: S\$82.6m
  • FY24: S\$71.9m
• Shipyard Revenue: [[2]]
  • 1H25: S\$20.7m
  • 1H24: S\$28.7m
  • FY25F: S\$45.5m
  • FY24: S\$51.6m
• Total Revenue: [[2]]
  • 1H25: S\$52.7m
  • 1H24: S\$61.6m
  • FY25F: S\$128.2m
  • FY24: S\$123.5m

Fleet and Yard Utilization

• Fleet Utilization: [[3]]
  • FY23: 70%
  • FY24: 68%
• Yard Utilization: [[3]]
  • FY23: 85%
  • FY24: 91%

Revenue by Segment (S\$ m)

Peer Comparison

ESG Considerations

• MPM has shown progress in environmental sustainability and social responsibility, particularly with hybrid energy systems, green ship recycling, and reduced emissions. [[5]]
• A rise in workplace safety incidents and increased energy consumption in certain areas pose operational challenges. [[5]]
• Upcoming initiatives like the hybrid-powered offshore wind service vessel and the ammonia-to-power collaboration with Amogy are critical for MPM’s ESG advancement. [[5]]

Key ESG Highlights

• Hybrid energy storage systems in CSOVs could reduce fuel consumption and emissions by 15-20%. [[5]]
• An MoU with Amogy aims to install an ammonia-to-power system on wind vessels. [[5]]
• MPM is venturing into green ship recycling, with its Indonesian shipyard being the first in the country to receive ISO 30000:2009 certification. [[5]]

ESG Trends

• MPM reduced Scope 1 and 2 emissions by 12% yoy and energy intensity by over 50% yoy in FY23, driven by LED lighting and hybrid technologies. [[5]]
• Electricity consumption increased by 15% yoy due to growing operations. [[5]]
• Workplace accidents increased from 8 in FY21 to 32 in FY23, highlighting the need for stricter safety management. [[5]]