After BBR’s listing on the Indonesia Stock Exchange early this year, Marco Polo Marine (MPM) has been increasingly branding itself as an entity for investors to gain exposure to Indonesia’s growing offshore sector. Indonesia currently has only a handful of AHTS vessels that are of at least 8,000 BHP, but there are expectation of more tenders of oil plots in certain parts of offshore Indonesia such as Sulawesi where the waters are rougher and where the demand for such larger vessels is likely to be higher.
Slow down in ship yard business, but hopes for new orders
In the last quarter, there was no shipbuilding revenue as revenue from BBR could not be recognized (eliminated from accounting consolidation) since BBR became a subsidiary. There was also no third-party work, which has been the case for some time. However, management expressed the possibility of securing external OSV orders in the coming quarter. Ship repair also saw a slow-down, which management thinks is seasonal.
Ship chartering provides a base load
Management is still upbeat on the outlook for the ship chartering business; its entire fleet of offshore support vessels continues to see high utilisation rates. Looking ahead, the offshore division is expected to be one of the major drivers of growth going forward, as the group plans to increase its OSV fleet over time, either by its internal building operations or via purchases from external parties.
Ceasing coverage
The long-term future of MPM looks bright, but time would likely be needed for significant earnings growth and a re-rating of the stock. We last rated MPM a HOLD with a fair value estimate of S$0.51. Due to a re-allocation of internal resources, we are ceasing coverage on this counter.
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