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MARCO POLO: Price surge on strong 1Q09 construction data
NextInsight | 28 May 2009
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By: NextInsight
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Originally published on www.nextinsight.net.
This article is reproduced here as part of our collaboration with NextInsight.

Why has the stock price of Marco Polo Marine shot up more by three quarters in the past 3-4 weeks?

From thin trades at 26 cents or less during the first two weeks of May and for many months before that, it leapt into action after its CEO, Sean Lee, presented his optimistic views at a SIAS Research seminar held on 7 May.

Yesterday evening, it closed at 41 cents on heavy trading volumes exceeding 20 million shares.

According to Mr Lee, charter rates are pretty stable for Marco Polo’s tug-and-barge operations right now.

”The demand for tugs and boats is as high as during the boom time,” he said.

The CEO himself was surprised at how their charter rates have held up, in stark contrast to UOB Kayhian marine analyst Nancy Wei’s view that shipping stocks will remain in the doldrums.

Stock started moving in mid May.
Stock started moving in mid May.

”Investors will start to differentiate the real recovery stocks over the current quarter and the next as companies continue to post losses,” commented Ms Wei.

Marco Polo’s revenues for 1H09 (6-months ended Mar 09) grew 46% year-on-year to S$24.0 million.

Its net earnings, however, contracted 17% to S$4.5 million, as non core operating income in 1H08 was bumped up by a one-time procurement income of S$1.4 million for securing 16 vessels for its JV; as well as a gain on disposal of 8 vessels.

It also incurred higher manpower costs, depreciation charges for its two drydocks, and finance costs incurred as a result of expanding its yard operations in 1H09.

Marine Transportation Stocks

Operating margin (%)

CY2Q09 profit(S$ million)

Quarter-on-quarter growth

YTD total stock return (%)

NOL

1.6

244.6

65%

27.7

SAMUDERA SHIPPING

7.0

-1.1

-123%

83.4

MARCO POLO MARINE

16.2

3.2

144%

84.1

FIRST SHIP LEASE

26.6

1.5

233%

6.2

SINGAPORE SHIPPING

35.6

-3.1

-1%

40.5

SWISSCO

36.0

5.4

-7%

66.2

MERCATOR LINES

48.7

14.6

12%

158.6

RICKMERS MARITIME

55.6

11.0

54%

34.9

PACIFIC SHIPPING

62.7

6.6

4%

62.7

Data source: Bloomberg



The problem with most shipping stocks is a vessel supply glut, brought about by the past 4 years of shipbuilding boom and boom-time orders lasting into 2010.

A Marco Polo tug
A Marco Polo tug

Mr Lee, however, is grateful that the Singapore government is increasing its construction spending to S$18 billion to S$20 billion in 2009.

”A lot of construction work has been brought forward, which means a lot of construction materials have to be brought here. They have to be carried by tugs and barges,” he said.

Construction demand expanded more than for other sectors, according 1Q09 GDP figures from the Ministry of Trade and Industry released last Thu (21 May).

The sector grew 9.6% quarter-on-quarter, compared to a 14.6% contraction of Singapore’s 1Q09 GDP.

Expectations of strong construction-led demand may have attracted punters in the week leading up to MTI’s data release.

Sim Kih NextInsight’s senior writer and photographer, who was an investor relations consultant for several years after working in equity sales at OSK-DMG & Partners. She has cleared all her Chartered Financial Analyst (CFA) examinations.

Please click here for more information about this author.

Marco Polo Marine  0.017 -- --   
Business: A regional integrated marine logistic co, principally engaged in shipping & shipyard businesses. [FY18 Turnover] Ship building & repair (56.8%), ship chartering (43.2%).

Insight: May-19, 1H19 revenue slid 17.7% due to reduced shi... Read More
Samudera Shipping Line  -- -- --   
Business: Co is a regional Container Shipping line serving the Middle East and the Indian Sub-continent in the west, South East Asia and Indo-China at the center and the Far East to the north.

Insight: Apr-19, 1Q19 revenue inched up 1.5% to US$93m due ... Read More
First Ship Lease Trust  -- -- --   
Business: Singapore-based business trust which owns a fleet of vessels across major shipping sub-sectors.

Insight: Feb-19, FY18 revenue fell 17.7% due to a reduced f... Read More
Singapore Shipping Corp  0.285 -- --   
Business: A spin-off from Stamford Land Corp that engages in ship owning and management, shipping agency and terminal operations as well as logistics services. [FY18 Turnover] Ship owning (69.9%), Agency and Logistics (30.1%).

Insight: Feb-19, 9M19 revenue edged up 3.3% to US$36m due t... Read More
Mercator Lines (S)  -- -- --   
Business: Co provides to clients dry bulk marine vessels on time charters or contracts of affreightment. [FY15 Geographical] Singapore (29%), Greece (13.3%), others (27.7%).

Insight: Jul-15, Co fell deeper into the red as 1Q16 revenu... Read More


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