RHB’s Jarick Seet, a long-time bull on Marco Polo Marine, has raised his target price on the stock to five cents from four cents, following the company’s recent business update that indicates “the inflection point” is here.
On Aug 18, Marco Polo reports revenue of $28.5 million for 3QFY2022 ended June, up 139.5% y-o-y, with gross profit up 185.3% y-o-y to $9.7 million, thanks to higher charter rates of its ships by 20-30%.
“We expect charter rates to rise by a further 10-20% over the near term due to limited supply and strong demand,” writes Seet in his Aug 30 note.
The company, which has invested in capacity expansion of its yards, has enjoyed higher utilisation rates of some 90%.
Also, Seet notes that with higher charter rates, thanks to the stronger overall energy and marine sector, the company’s ability to chalk a “strong turnaround” is now “a reality”.
Pandemic-related issues in Taiwan is easing too, which will speed up the progress of windfarm-related projects that Marco Polo can possibly win in that market, he adds.
For 3QFY2022, gross margin rose from 28.6% to 34% y-o-y and Seet sees further improvement.
“As a result, we feel that the inflection point for Marco Polo Marine is finally here, and as such, we raise FY22F-23F PATMI by 225% and 50% to account for higher charter and utilisation rates,” states Seet.
Marco Polo Marine traded at 3.8 cents as at 10.16am.