Вы находитесь на странице: 1из 5

Singapore | Industrials

Asia Pacific Equity Research


MARKET CAP: USD 115M AVG DAILY TURNOVER: USD 0.3M 6 Mar 2013 Company Update


Steady results Positioning for opportunities in Indonesia Ship repair outlook still good

BUY (maintain)
Fair value add: 12m dividend forecast versus: Current price 12m total return forecast S$0.56 S$0.00 S$0.42 33%

1QFY13 results in line Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. The fall in revenue was mainly due to slower progress in newbuild orders, resulting in lower ship building revenue. This was offset by higher ship repair turnover, which grew 75.5% YoY to S$8.6m in 1QFY13. Ship chartering revenue fell by 5.2% YoY to $5.5m with the mandatory docking of an offshore vessel. Overall gross profit margin, however, increased from 25% in 1QFY12 to 39% in 1QFY13 with a higher proportion of ship repair revenue (which generally commands higher margins compared to ship building). Demand for larger AHTS vessels in Indonesia to grow Indonesia currently has only five AHTS vessels that have at least 8,000 BHP two belong to Wintermar Offshore (year built: 2011), two belong to Marco Polo Marine (year built: 2011), and the remaining one is more than 30 years old. According to management, there are increasingly more tenders of oil plots in certain areas of Indonesia such as Sulawesi where the waters are rougher and where demand for 8,000 BHP AHTS vessels is likely to be higher. Ship repair and OSV as growth drivers The group is still upbeat on the outlook for the ship repair business for the next 12 months. Utilisation rates of its drydocks remain healthy; we believe they may be higher than the industry average of 80+%. Growth is also expected from the offshore support vessel segment MPM is currently constructing a unit for its fleet, with plans for a second one. Maintain BUY with S$0.56 fair value estimate, still based on 8x FY13F EPS.

Analysts Low Pei Han, CFA (Lead) +65 6531 9813 lowph@ocbc-research.com Chia Jiun Yang, CFA +65 6531 9809 chiajy@ocbc-research.com

Key information Market cap. (m) Avg daily turnover (m) Avg daily vol. (m) 52-wk range (S$) Free float (%) Shares o/s. (m) Exchange BBRG ticker Reuters ticker ISIN code GICS Sector GICS Industry Top shareholder S$143.1 / USD114.9 S$0.4 / USD0.3 0.9 0.2935 - 0.45 40.3 340.8 SGX MPM SP MAPM.SI 5LY Industrials Marine Nautical Intl 56.2% 1m 1 2 3m 13 7 12m 14 2

Relative total return Company (%) STI-adjusted (%) Price performance chart
Shar e Pr i ce (S$ ) 0.63 0.56 0.49 0.42 0.35 0.28 Mar -12 Jun-12 Sep-12

Index Level 4800 4240 3680 3120 2560 2000 Dec-12 Mar -13

Fair Value
Sources: Bloomberg, OIR estimates



Key financial highlights Year Ended 30 Sep (S$m) Revenue Gross profit Other operating income Profit attributable to shareholders EPS (S cents) Cons. EPS (S cts) Net profit margin (%) PER (x) ROA (%) Price/Book (x) FY11 83.0 23.3 11.5 17.3 5.1 na 20.8 8.3 8.3 1.2 FY12 89.8 29.2 3.9 21.3 6.3 na 23.8 6.7 9.5 1.0 FY13F 95.6 30.1 4.0 23.7 7.0 7.0 24.8 6.0 9.5 0.9 FY14F 103.2 32.5 4.0 25.1 7.4 7.7 24.3 5.7 9.1 0.8

Industry-relative metrics
P er c ent i l e 0t h 25t h 50t h 75t h 100t h

M k t Cap B et a ROE PE PB


I ndust r y A v er age

*Special dividend of S$0.01/share paid on 22 Dec 2011

Note: Industry universe defined as companies under identical GICS classification listed on the same exchange. Sources: Bloomberg, OIR estimates

Please refer to important disclosures at the back of this document.

MICA (P) 035/06/2012

OCBC Investment Research Singapore Equities

Shipyard business The group undertakes ship building and maintenance as well as repair, outfitting and conversion services in Batam, Indonesia. Occupying a total land area of about 34ha with a sea front of 650m, the shipyard also houses three dry docks. The group has delivered AHTS vessels up to 8,080 BHP, tugboats, and barges up to 300ft. It has also delivered a swamp-drilling barge as well. Meanwhile, the ship repair business is a relatively high margin business, providing steady cash flows under smooth execution and assuming the repair market is healthy. Chartering business MPM had a fleet of 22 vessels (four are offshore vessels and the rest tugs and barges) while its 49%-owned associate, PT Pelayaran Nasional Bina Buana Raya (BBR), had 88 vessels as at 30 Sep 2012. We understand that BBR has 35 pairs of tugs and barges and three offshore vessels at the end of last year, but the number of tugs and barges is expected to decrease as the company is planning to downsize this segment of the fleet. The funds will be used to support growth of the offshore support vessel fleet (out of the three under BBR, two are of 8,000 BHP and the remaining one 5,400 BHP). In addition to the OSVs under BBR, the group also has two more AHTS vessels and a utility crew boat vessel. Leveraging on the cabotage law in Indonesia The cabotage law stipulates that only Indonesian-flagged vessels can ply point-to-point within the countrys waters. For vessels to be Indonesianflagged, they have to be owned by an Indonesian company, or no more than 49% owned by foreigners. There are also regulations on a local crew complement. MPM is able to access the Indonesian market due to its BBR entity.

Exhibit 1: SWOT table

Strengths Integrated marine operations (shipbuilding, repair and chartering) allows for operational flexibility Established track record in ship chartering Vessel fleet relatively young (less than five years) Able to operate in Indonesia despite cabotage rule Opportunities Development of a larger offshore supply business in SE Asia Expansion of vessel fleet in anticipation of increase in demand of chartering activities in Indonesia Potential for increasing efficiency and cutting costs Weaknesses Relatively short track record in ship building and repair Interested party transactions

Threats Regulatory changes in Indonesia, where the group has its yard and charters its fleet Inclement weather that result in flooding in coal mines

Source: OIR

OCBC Investment Research Singapore Equities

Exhibit 2: Financial trends since 1Q08

35 30 25 40% 20 30% 15 20% 10 5 0
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13










Source: Company, OIR

Exhibit 3: Shipyard and shipchartering revenue breakdown

30 25 20


15 10 5 0
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13



Source: Company, OIR

OCBC Investment Research Singapore Equities

Company financial highlights

Income statement Year Ended 30 Sep (S$m) Revenue Gross profit Other operating income Admin expenses Operating profit Operating profit (ex-EI) EBIT Profit before tax Profit for the year Profit attributable to shareholders

FY11 83.0 23.3 11.5 -7.9 20.5 12.3 22.2 20.6 17.3 17.3

FY12 89.8 29.2 3.9 -6.8 21.7 18.8 24.9 25.0 21.3 21.3

FY13F 95.6 30.1 4.0 -7.6 23.0 17.7 28.9 27.9 23.7 23.7

FY14F 103.2 32.5 4.0 -8.3 24.7 19.4 30.7 29.5 25.1 25.1

Balance sheet As at 30 Sep (S$m) Cash and cash equivalents Other current assets Fixed assets Other long term assets Total assets Debt Total liabilities Shareholders equity Total equity Total equity and liabilities

FY11 13.7 61.7 96.6 19.3 208.7 46.1 85.2 123.5 123.5 208.7

FY12 12.5 18.9 107.1 24.3 224.8 55.3 83.7 141.2 141.2 224.8

FY13F 9.6 23.3 110.9 24.3 249.9 58.8 90.4 159.6 159.6 249.9

FY14F 8.0 24.4 123.1 24.3 275.5 62.7 96.2 179.4 179.4 275.5

Cash flow statement Year Ended 30 Sep (S$m) Op profit before working cap. changes Working cap, taxes and int Net cash from operations Purchase of PP&E Investing cash flow Financing cash flow Net cash flow Cash at beginning of year FDs, cash pledged and others Cash at end of year

FY11 19.9 -11.7 8.2 -74.4 -13.0 11.7 6.9 3.8 9.9 13.7

FY12 28.0 6.5 34.5 -30.4 -36.0 3.8 2.3 13.7 -1.2 12.5

FY13F 16.0 -3.0 13.0 -20.0 -11.5 -9.5 -8.1 12.5 -2.9 9.6

FY14F 18.5 -1.9 16.6 -20.0 -19.2 -5.8 -8.4 9.6 -1.6 8.0

Key rates & ratios EPS (S cents) NTA per share (S cents) Net profit margin (%) PER (x) Price/NTA (x) Price/Book (x) Dividend yield (%) ROE (%) ROA (%) Net gearing (%) Sources: Company, OIR forecasts

FY11 5.1 36.2 20.8 8.3 1.2 1.2 0.0 14.0 8.3 22.5

FY12 6.3 41.4 23.8 6.7 1.0 1.0 3.0* 15.1 9.5 27.9

FY13F 7.0 46.8 24.8 6.0 0.9 0.9 0.0 14.9 9.5 28.7

FY14F 7.4 52.6 24.3 5.7 0.8 0.8 0.0 14.0 9.1 28.6

*Special dividend of S$0.01/share paid on 22 Dec 2011

Company financial highlights

OCBC Investment Research Singapore Equities

SHAREHOLDING DECLARATION: The analyst/analysts who wrote this report hold NIL shares in the above security.

DISCLAIMER FOR RESEARCH REPORT This report is solely for information and general circulation only and may not be published, circulated, reproduced or distributed in whole or in part to any other person without our written consent. This report should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities mentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in this publication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness, and you should not act on it without first independently verifying its contents. Any opinion or estimate contained in this report is subject to change without notice. We have not given any consideration to and we have not made any investigation of the investment objectives, financial situation or particular needs of the recipient or any class of persons, and accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the recipient or any class of persons acting on such information or opinion or estimate. You may wish to seek advice from a financial adviser regarding the suitability of the securities mentioned herein, taking into consideration your investment objectives, financial situation or particular needs, before making a commitment to invest in the securities. OCBC Investment Research Pte Ltd, OCBC Securities Pte Ltd and their respective connected and associated corporations together with their respective directors and officers may have or take positions in the securities mentioned in this report and may also perform or seek to perform broking and other investment or securities related services for the corporations whose securities are mentioned in this report as well as other parties generally. Privileged / confidential information may be contained in this document. If you are not the addressee indicated in this document (or responsible for delivery of this message to such person), you may not copy or deliver this message to anyone. Opinions, conclusions and other information in this document that do not relate to the official business of OCBC Investment Research Pte Ltd, OCBC Securities Pte Ltd and their respective connected and associated corporations shall not be understood as neither given nor endorsed.

RATINGS AND RECOMMENDATIONS: - OCBC Investment Researchs (OIR) technical comments and recommendations are short-term and trading oriented. - OIRs fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon. - As a guide, OIRs BUY rating indicates a total return in excess of 10% given the current price; a HOLD trading indicates total returns within +/-10% range; a SELL rating indicates total returns less than -10%. - For companies with less than S$150m market capitalization, OIRs BUY rating indicates a total return in excess of 30%; a HOLD trading indicates total returns within a +/-30% range; a SELL rating indicates total returns less than -30%.

Co.Reg.no.: 198301152E Carmen Lee Head of Research For OCBC Investment Research Pte Ltd

Published by OCBC Investment Research Pte Ltd