UOB Kay Hian
Date of Report: 20 August 2025

Marco Polo Marine: Navigating Growth in Offshore Marine with Strong FY26 Outlook

Introduction: Marco Polo Marine’s Resilience and Growth Prospects

Marco Polo Marine Ltd. (SGX: MPM SP), an integrated marine logistics group specializing in ship chartering and shipyard operations, continues to demonstrate resilience in a challenging market. The company’s latest quarterly results, strategic vessel investments, and expansion into offshore wind highlight its robust positioning for future growth. UOB Kay Hian maintains its BUY rating and raises the target price, citing improved earnings visibility and strong sector tailwinds.

Company Snapshot

• Business Model: Integrated marine logistics, operating offshore support vessels (OSVs) and a shipyard in Batam, Indonesia.
• Share Price: S\$0.063
• Revised Target Price: S\$0.076 (Up from S\$0.066)
• Upside Potential: +20.6%
• Market Capitalization: S\$235.6 million
• Major Shareholders: Lee Family (22.6%), Apricot Capital (16.5%), Penguin International (8.1%)

3QFY25 Results: In Line with Forecasts, Poised for Recovery

Marco Polo Marine reported 3QFY25 results that aligned with expectations, reinforcing confidence in its recovery trajectory.

• Revenue: Declined 9% YoY in 3QFY25, predominantly due to lower shipyard contributions and softer third-party vessel rechartering in Taiwan.
• Gross Profit: Slight 4% YoY dip, but gross margin improved to 44% due to a more favorable revenue mix with fewer low-margin recharters.
• Progress: 9MFY25 revenue and gross profit met 70% and 73% of full-year forecasts, respectively.

Segment Performance: Chartering and Shipyard Operations

Ship Chartering: CSOV Debut Offsets Taiwan Weakness

• Ship chartering revenue decreased 4% YoY to S\$22 million, affected by weaker Taiwan rechartering but buoyed by higher charter rates.
• The company recorded its first income from the MP Wind Archer, its commissioning service operation vessel (CSOV), which began operations in April 2025.
• Vessel utilization improved to 71% in 3QFY25 (from 65% in 2QFY25), indicating healthier chartering activity.
• Offshore support vessel (OSV) demand remained stable, with day rates trending higher.

Shipyard Operations: Ship Repair Activity Accelerates

• Shipyard revenue fell 19% YoY to S\$9.5 million due to fewer shipbuilding projects.
• Ship repair utilization rebounded strongly, rising to 88% in 3QFY25 (from 73% in 2QFY25), reflecting a recovery in yard activity.

Financial Highlights and Key Metrics

Growth Catalysts: New Vessels, Shipyard Capacity, and Offshore Wind Expansion

• CSOV and CTVs: The first CSOV (MP Wind Archer) and three new crew transfer vessels (CTVs) in Taiwan are expected to contribute significantly from 4QFY25, with a full-year impact in FY26. Estimates suggest a CSOV and CTV could generate US\$13 million (~S\$17 million) and US\$2 million (~S\$3 million) in annual revenue, respectively.
• Shipyard Expansion: The completion of a fourth dry dock at Batam, set to receive its first vessel in late August 2025, expands capacity by ~25% and will further boost shipyard revenue in FY26.
• Market Tailwinds for OSVs: Tight vessel supply, limited newbuilds, and constrained shipyard capacity are driving up rates. As of December 2024, the global orderbook comprised only 40 anchor handlers and 30 platform supply vessels, with deliveries taking around two years. Day rates for 5,000-bhp anchor handling tug supply vessels have remained firm at US\$8,498, up 6% from 2024 and 23% from 2023 averages.
• Offshore Wind Diversification: Management is actively diversifying into offshore wind, a sector with 83GW installed, 48GW under construction, and another 100GW projected in the next two years. Robust global auction activity (56.3GW in 2024) was led by China, Europe, the US, and Northeast Asia, with MPM’s CSOV deployed in the latter region. The dual-use versatility of CSOVs across offshore wind and oil & gas enhances their strategic value.

Valuation and Recommendation: BUY with Raised Target Price

• BUY rating maintained with a 15% higher target price of S\$0.076, up from S\$0.066, as the valuation base year rolls forward to FY26.
• Valuation basis: 9.5x FY26F PE, or one standard deviation above the historical three-year PE range, reflecting improved earnings visibility from new vessel and shipyard contributions.
• Current valuation: Shares trade at 7.9x FY26F PE, offering an attractive entry point ahead of anticipated FY26 growth catalysts.

Share Price Catalysts to Watch

• Higher-than-expected ship charter rates and vessel utilization.
• Award of new ship chartering contracts.
• Greater value of ship repair projects during the year.

Balance Sheet and Cash Flow Overview

Conclusion: Marco Polo Marine Positioned for Offshore Upside

Marco Polo Marine’s strong operational performance, strategic fleet expansion, and diversification into offshore wind position it for robust earnings growth into FY26 and beyond. With its integrated business model and expanding shipyard capacity, the company is well-placed to capitalize on favorable market conditions in offshore oil & gas and renewables. At current valuations, the stock offers an attractive entry point for investors seeking exposure to the offshore marine sector’s next wave of growth.