Marco Polo Marine

Marco Polo Marine: FYSep12 results in line. Revenue grew 8% to $89.8m, while net profit rose 23% yoy to $21.3m. Gross margin was 32.5% vs 28.1% yoy, mainly due to ship repair which performed well in the yr. Revenue from shipbuilding and repair increased 33% to $69.3m, while shipchartering registered a 23% fall to $20.5m. MPM has been reflagging its vessels to Indonesian flag and parking then under its 49% owned associate, BBR, due to the Indonesia cabotage rule. Now the shipping business of MPM has been confined to waters outside of Indonesia while BBR assumes the Indonesian chartering business. OCBC believes there is a possibility of a BBR listing on the Jakarta Stock Exchange in the coming months. It currently has 35 pairs of tugs and barges and three OSVs, but the former is expected to decrease over time as proceeds from sales will be used to fund the growth of the OSV fleet. As the OSV fleet grows, BBR may be able to brand itself as an entity for investors to gain exposure to Indonesia’s growing offshore sector. There are currently relatively few of such companies listed in Indonesia. Mgt mentioned that it is still receiving enquiries for ship repair, outfitting and conversion services. As for the chartering side, MPM expects charter rates for offshore vessels as well as tugs and barges to remain stable. OCBC maintains at Buy, with higher TP at $0.56 vs $0.53 previously, as it rolls forward to FY13 P/E with an unchanged multiple of 8x.