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
| Financial Summary | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| Revenue (S\$m) | 127.1 | 123.5 | 128.2 | 152.6 | 164.3 |
| Operating EBITDA (S\$m) | 43.30 | 42.70 | 44.18 | 53.44 | 59.42 |
| Net Profit (S\$m) | 22.58 | 21.70 | 25.07 | 32.01 | 35.77 |
| Core EPS (S\$) | 0.006 | 0.007 | 0.007 | 0.009 | 0.010 |
| Core EPS Growth | 60.9% | 4.5% | 1.9% | 27.7% | 11.8% |
| FD Core P/E (x) | 7.01 | 6.71 | 6.59 | 5.16 | 4.62 |
| DPS (S\$) | 0.001 | 0.001 | 0.001 | 0.001 | 0.001 |
| Dividend Yield | 2.27% | 2.27% | 2.50% | 2.50% | 2.73% |
- 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)
| FYE Sep (S\$ m) | FY23 | FY24 | FY25F | FY26F | FY27F |
|---|---|---|---|---|---|
| Shipbuilding | 15.8 | 18.8 | 6.8 | 12.1 | 17.7 |
| Ship repair | 42.7 | 29.7 | 36.4 | 45.8 | 50.0 |
| Sale of goods | 2.7 | 3.0 | 2.3 | 2.7 | 3.2 |
| Shipyard | 61.2 | 51.6 | 45.5 | 60.7 | 71.0 |
| Ship chartering | 65.9 | 71.9 | 82.6 | 91.9 | 93.3 |
| Total revenues | 127.1 | 123.5 | 128.2 | 152.6 | 164.3 |
Peer Comparison
| Company | Ticker | Recom. | Price (lcl curr) | Target Price (lcl curr) | Market Cap (US\$ m) | 2-year EPS CAGR (%) | Recurring ROE (%) CY25F | Recurring ROE (%) CY26F | Dividend Yield (%) CY25F |
|---|---|---|---|---|---|---|---|---|---|
| Marco Polo Marine | MPM SP | Add | 0.04 | 0.06 | 127 | 21.8% | 0.8 | 0.7 | 13.2% |
| Pacific Radiance | PACRA SP | Add | 0.04 | 0.07 | 45 | 33.7% | 0.5 | 0.5 | 5.9% |
| Mermaid Maritime | MMT SP | Add | 0.11 | 0.16 | 114 | 59.3% | 0.6 | 0.5 | 8.2% |
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]]
