Brokers’ take: RHB raises Marco Polo Marine target on expectations of rising charter rates

POSITIVE on Marco Polo Marine’s outlook, RHB on Tuesday (Aug 30) raised its target price on the marine logistics group to S$0.05, while maintaining its “buy” call as analyst Jarick Seet foresees charter rates will continue rising on strong demand.

The research house noted that revenue for the company had more than doubled in the third quarter of FY2022, due to a “strong recovery in its utilisation rate of close to 90 per cent, driven by strong demand from the O&G (oil and gas) and offshore wind farm sectors”.

A strong demand, coupled with the reflagging of one vessel to service Taiwan’s offshore wind farm market, also drove up charter rates for the company by between 20 and 30 per cent. Seet believes this uptrend will likely continue to grow by another 10 to 20 per cent in the near term due to limited supply and strong demand.

Additionally, he sees the company’s positive earnings as an “inflection point” and further raised his profit after taxation and minority interests estimates by 225 per cent and 50 cent for FY2022 and FY2023 respectively.

Marco Polo Marine’s profits are also likely to get an extra boost from a strong recovery in West Texas Intermediate crude prices as well as the improving Covid-19 situation in Taiwan — which RHB believes would hasten more project wins in the renewable energy segment.

At the target price of S$0.05, this represents a 28.2 per cent premium against the counter’s trading price of S$0.039, having gained 5.4 per cent or S$0.002 on Tuesday as at 10.55 am.