The company&rsquo s revenue mix will rely on oil and gas for now 

 

THE pivot to the renewable energy sector for Macro Polo Marine (MPM) was something that CEO Sean Lee has been pondering for a while.

 

In the quest to turn around the business as oil and gas demand for vessels cooled in 2019, Lee and Darren Teo, managing partner at Apricot Capital (a major shareholder of MPM) had a conversation on pivoting to the renewable energy sector. A think tank was set up and ideas were bounced about for a year, but nothing concrete arose.

 

It took a vessel charter from a Taiwanese company to pique Lee&rsquo s interest in 2020. It was during Covid-19, and Lee made multiple trips to Taiwan, enduring long quarantines to talk to vessel charterers there.

 

&ldquo I realised that our vessels were working for the wind farms there, at that moment I thought it was an opportunity, we could repurpose our vessels to work for a different industry,&rdquo said Lee.

 

Further research to understand the market revealed a gap in the commissioning service operation vessel (CSOV) and the service operation vessel (SOV) space. SOVs offered little by way of margins, but CSOVs were looking attractive.

 

CSOV is a vessel that would house both its crew and technicians as well as provide a platform for equipment to work on offshore wind farms.

 

When MPM decided to build its own back in 2020, there were only 23 active CSOVs in the market, all based in Europe. While another 15 were under construction, MPM wanted to plug the gap in Asia. &ldquo This is a neglected market, and European players found operating in Asia a challenge. That&rsquo s where we found an advantage in being an Asian player,&rdquo explained Lee.

 

There were plans to initially repurpose an anchor handling tug vessel to build MPM&rsquo s first CSOV. However, further research showed that it was not suitable, leading the company to design and build their own after getting inputs from the various partners in the ecosystem.

 

Considering the different demands that various customers wanted, Lee noticed that comfort was a common topic. &ldquo So I thought let&rsquo s do an Asian version of that,&rdquo he said.

 

Commercial vessels typically have a spartan interior. But MPM&rsquo s new CSOV &ndash the MP Wind Archer &ndash is outfitted with soft lighting and design features that would not be out of place in an interior designer&rsquo s showcase.

 

Other creature comforts such as a cinema, a karaoke room and a lounge with a massage chair are available for the crew and technicians on the boat. Coupled with air conditioning with 100 per cent redundancy to deal with Taiwan&rsquo s summer, the Wind Archer is markedly different from other CSOVs.

 

The vessel can accommodate up to 110 personnel, and these touches are meant to aid in retaining personnel working in the harsh offshore environment.

 

&ldquo It&rsquo s a balancing game at the end of the day we are trying to differentiate ourselves from the rest of the players,&rdquo pointed out Lee.

 

There is also another added benefit of going into CSOVs, as the oil and gas sector has started utilising CSOVs as well for offshore operations.

 

The Wind Archer has charters for the next three years.

 

Coupled with the expected completion of the Drydock 4 and the acquisition of three crew transfer vessels, MPM expects these assets to contribute to financial performance from the second half of 2025.

 

The most recent first-quarter 2025 update showed revenue falling 11 per cent to S$25.8 million from S$29.1 million in Q1 2024. MPM did not report net profit in its Q1 update.

 

Both its business units &ndash ship chartering and shipyard &ndash saw declines in Q1 2025 revenue contributions.

 

Ship-chartering revenue for the quarter fell 13 per cent due to lower third&ndash party chartering income from Taiwan. This was offset by higher charter rates of utilised vessels and a marginal improvement of average fleet utilisation rate from 70 per cent to 71 per cent.

 

Shipyard revenue for Q1 2025 dipped 9 per cent, driven by a decline in ship-building activities. This was offset by an increase in ship-repair projects which drove up yard utilisation rates to 83 per cent from 79 per cent.

 

Looking ahead, MPM&rsquo s revenue mix will still rely more on oil and gas rather than renewables in the short term, as the company lacks enough vessels to support the new segment.

 

But Lee believes that the revenue mix will be more balanced between the two sectors in the future.

 

&ldquo The fact that we are doing more capex in the wind industry, a larger percentage will go to pure wind farms rather than oil and gas,&rdquo he added.

On Feb 11, Marco Polo Marine : 5LY -3.57% executive director and CEO Sean Lee acquired one million shares at an average price of S$0.054 per share.

 

This took his total interest in the regional integrated marine logistics company to 4.8 per cent, from 4.78 per cent. His preceding acquisition was on Dec 4, with two million shares acquired at S$0.053 apiece. 

 

Lee has been the company&rsquo s chief executive since September 2007. He is responsible for setting the business strategies and directions for the group, and managing its business operations. He has gradually increased his total interest in the company from 0.23 per cent as at end-2017. 

 

Marco Polo Marine reported revenue of S$123.5 million for FY2024 (ended Sep 30), down from S$127.1 million in FY2023. Its ship chartering segment continued to drive growth, benefiting from higher charter rates and robust demand from the offshore oil-and-gas and renewable energy sectors. 

 

Conversely, its shipyard segment&rsquo s revenue was affected by the construction of a new commissioning service operation vessel (CSOV), which led to lower ship repair volumes and reduced third-party shipbuilding activities. 

 

Last week, the management of Marco Polo Marine hosted a broad mix of market participants on Wind Archer, the new CSOV, which is designed to meet Asia&rsquo s growing demand for support vessels in the offshore wind farm industry. 

 

The S$60 million vessel is equipped with the latest walk-to-work motion-compensated gangway for safe personnel transfer, and a 3D motion-compensated crane for cargo transfer.

 

It features state-of-the-art green technology, including a hybrid battery-based energy storage system that reduces carbon emissions by 15 to 20 per cent, and is designed to be future-ready for methanol fuel use. 

 

The vessel can accommodate up to 110 people. Its amenities include a gym with windows, a cinema room, spacious kitchen facilities and multiple gathering rooms.

 

Wind Archer will soon set sail to be deployed across various offshore wind farm projects in Taiwan. The charter rates are kept confidential due to the competitive nature of the growing offshore wind sector. 

 

Marco Polo Marine&rsquo s strategic pivot towards the renewable energy sector has helped to diversify its customer base, in addition to increasing its asset utilisation. Its net asset value stood at S$201.1 million as at FY2024, up from S$183.9 million in FY2023.

 

The company has a cash position of S$68.8 million, with net cash amounting to S$35.8 million after accounting for borrowings. 

 

Marco Polo Marine is headquartered in Singapore. Meanwhile, its shipyard is in Batam and occupies more than 34 hectares of land. In FY2024, the shipyard operated at an average utilisation rate of 91 per cent, compared with 84 per cent in FY2023.

 

The company&rsquo s fourth dry dock commenced construction in May 2024, and is expected to be completed in the first half of this year. The new dry dock will be used for building, maintaining and repairing ships, which will further strengthen Marco Polo Marine&rsquo s capabilities. Revenue recognition from the dry dock is expected to start in H2 2025.

 

The remainder of Marco Polo Marine&rsquo s fleet &ndash which includes vessels such as offshore support vessels, maintenance work vessels, tugboats and barges &ndash supports its operations in the offshore market.

 

OVER the five trading sessions from Feb 7 to 13, institutions were net buyers of Singapore stocks, leading to a net institutional inflow of S$63 million, partially reversing the net outflow of S$169 million in the preceding five sessions.

 

This brings the net institutional outflow for the year to Feb 13 to S$633 million.  

 

Institutional flows 

The stocks that led the net institutional inflow over the five sessions included Singtel : Z74 -1.47%, Seatrium : 5E2 +1.18%, Singapore Exchange : S68 -5.79% (SGX), CapitaLand Integrated Commercial Trust : C38U +1.03%, CapitaLand Ascendas Real Estate Investment Trust : A17U -0.78% (Reit), Yangzijiang Shipbuilding : BS6 +2.61%, CapitaLand Investment : 9CI 0%, Yangzijiang Financial : YF8 +1.92%, Rex International : 5WH 0% and Suntec Reit : T82U 0%.

 

Meanwhile, the counters that led the net institutional outflow included OCBC : O39 +0.29%, DBS : D05 -0.49%, Keppel : BN4 0%, Sembcorp Industries : U96 +1.12%, Mapletree Industrial Trust : ME8U 0%, UOB : U11 +1.09%, Frasers Centrepoint Trust : J69U +0.48%, Sats : S58 -1.19%, ComfortDelGro : C52 +1.47% and Hongkong Land : H78 +4.07%.

 

Consequently, over the five sessions, telecommunications and industrials recorded the highest net institutional inflow, while financial services and utilities posted the most net institutional outflow.

 

Singtel booked S$112 million of net institutional inflow over the five sessions, bringing its net institutional inflow for the year to Feb 13 to S$235 million.

 

On Feb 7, the telco announced that its regional data centre arm, Nxera DCT, secured a S$643 million five-year green loan to develop a 58-megawatt data centre in Singapore.

 

The loan will fund the development and capital expenditure of DC Tuas, which is intended to be the &ldquo most hyper-connected green data centre&rdquo and have the highest power density in the country.

 

The data centre was awarded the Green Mark Platinum certification, reinforcing the group&rsquo s commitment to sustainable design and operations.

 

Share buybacks

Over the five sessions, four primary-listed companies conducted buybacks, with a total consideration of S$129,251, similar to the S$130,882 filed during the preceding five ones.

 

The decline in buyback filings is seasonal, attributable to the busy schedule for releasing full-year financial statements in February. As a best practice, companies should avoid buying back their shares in the month immediately preceding the release of their full-year financial statements.