UOB Kay Hian maintains 'buy' call and 6 cents target price for Marco Polo Marine

Their target price of 6 cents is pegged to 1.3x FY24F book value

UOB Kay Hian analysts Heidi Mo and John Cheong have maintained their 'buy' call and 6 cents target price on Marco Polo Marine 5ly, as they expect the company to report better topline and earnings this year amid a buoyant energy market.

Specifically, the analysts have raised their revenue and earnings estimate for FY2023 ended Sept 30 by 7%, thanks to higher charter rates of its vessels as well as better utilisation of its yard space.

For the most recent 3QFY2023 business update ended June, revenue was up 28.9% y-o-y to $36.8 million, which has brought 9MFY2023 revenue to $92.7 million, up 65.1% y-o-y.

Mo and Cheong, in their Sept 25 report, point out that Marco Polo Marine is benefitting from increased investments in offshore windfarm projects, which means possibly higher charter rates for its fleet of offshore support vessels.

In addition, with the construction of Dry Dock 4, the company is expanding its yard capacity by 25% by 1QFY2025, which gives it the potential to win over more repair businesses. As of 3QFY2023, its yards are already at a utilisation rate of 93%.

The analysts also note that Marco Polo Marine has continued to effectively market its business operations to regional ship owners in Indonesia to undertake more shipbuilding projects, while widening its customer network for ship repair activities to drive revenue growth.

To grow its ship chartering revenue, the company is looking forward to putting its new commissioning service operation vessel to work by 3QFY2024.

Meanwhile, the company has also built up a strong net cash position of $50.2 million as at end-1QFY23, which provides a "comfortable level" of support, the analysts say.

Their target price of 6 cents is pegged to 1.3x FY24F book value.

Marco Polo Marine shares changed hands at 4.8 cents as at 3.55pm, down 4%.

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