Wednesday, March 20, 2013

Marco Polo Marine- A Buy

Marco Polo Marine (MPM) headquartered in Singapore is an investment holding company which was founded in 2006. Its primary business is to offer tug boats & barges to a diverse set of customers spanning from commodities, mining, infrastructure, construction, property development and land reclamation industries amongst others

 It also engages in transshipment services which could be defined as transportation of coal from the Indonesian mines to coal purchasers and from their transporting it to Asian electric power plants for final consumption. The two different business segments of MPM are Ship chartering & Shipyard. Ship chartering segment engages in charter, hire activities of ships while Shipyard deals with repair, maintenance & brokering activities of vessels.

MPM has a global presence, spreading across Thailand, Indonesia & Australian waters.


  • Ship chartering fleet has been operating at close to 100% of its capacity. 
  • Young & technologically advanced fleet: MPM vessels are well-equipped with sophisticated tools like satellite surveillance systems which ensure quick response-time. Its shipyard lately outfitted a DP-3 vessel, adding yet another feather in its achievement-hat. 
  • Diverse & reliant clientele: With its customers’ profile ranging from property developers to mining, MPM enjoys a stable & regular flow of business through the year. 
  • Cost containment: Successful integration of the two business segments helps MPM enjoy higher cost-benefits compared to its competitors. Moreover, its shipyard operational location at Batam; a free-trade zone & its ship chartering operations located at Singapore; an important industrial hub in the South East Asian region and is also in close proximity to vital shipping routes; aids MPM in getting an edge over its competitors. 
  • MPM enjoys various tax benefits.
Recent developments 

Chairman Mr. Lee purchased 1.0million of MPM common stock at S$ 0.42, the highest ever he has paid, totaling his stake at 59.5% (or a total of 202.8Million shares). This move of Mr. Lee signifies his confidence into the fundamentals of MPM.

The recent implementation of the cabotage law in Indonesia worked in favor of MPM. The enforcement of cabotage law compelled customers to cancel their contracts with foreign contractors whose vessels failed to conform to the norms of the cabotage law. Thus, as the supply suddenly shrunk from the foreign contractors, charter rates saw a sudden spike. MPM seized the opportunity & is reaping higher margins & better utilization rates.

Looking Forward

MPM is planning to further integrate its two business segments of Ship Chartering & Shipyard to establish ship repair, conversion & maintenance capabilities at its own shipyard.

MPM is inclined to broaden its product portfolio into bigger & sophisticated vessels such as the Anchor Handling, Towing & Supply (AHTS) vessels, tankers, cargo ships (which are 150 meters in length) and accommodation barges, all of which are in huge demand riding on the back of the oil & gas marine logistics industry.

It further plans to expand its customer base of its shipping business leveraging the growing industry & Singapore economy at large.

Stock Information

Marco Polo Marine (“MPM”) was listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”) in 2007. Marco Polo marine (SGX:MPM) share price closed at S$0.43 a share. The average volume of shares traded is 0.2Million at the Singapore Stock Exchange.

Reasons to Buy 

With strong fundamentals & a robust business model MPM seems an attractive investment.  This is also considering the significant purchase by an insider who also happens to be the Chairman. Net revenue is expected to increase to S$ 108.8Million in FY2013 & to S$ 125.6Million in FY2014 respectively. Its EPS is estimated to reach S$0.07 per share in FY2013 & to S$ 0.077 per share in FY2014.

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