- Mermaid Maritime is in the final stages of negotiating cable-laying and inspection, repair, and maintenance (IRM) orders in the Middle East and West Africa.
- The company plans to reactivate its dive support vessel, Mermaid Commander, in 2025 to enhance fleet utilization.
- The strengthening of the US dollar against the Thai baht since the end of September could positively impact Mermaid Maritime’s net profit in 4Q 2024.
Mermaid Maritime Public Co Ltd (SGX:DU4) (MMPC.SI) faced a significant decline in net profit in the third quarter of 2024 (3Q 2024), primarily due to foreign exchange (forex) losses. This loss mainly came from an unrealized loss from trade accounts payable originally denominated in Thai baht. However, this may reverse in 4Q 2024 with the strengthening of the US dollar. The company is also pursuing growth through new contracts and enhancing fleet utilization.
Mermaid Maritime is a provider of subsea and offshore services. Key business segments include subsea inspection, repair, and maintenance (IRM) for underwater structures, as well as laying subsea cables (cable-laying), and decommissioning of offshore oil and gas assets that have reached the end of their operational life.
Headquartered in Thailand, the company operates across Southeast Asia, the Middle East, and Africa, and is expanding into Europe. Its fleet includes dive support vessels (DSVs) and remotely operated vehicles.
Financial Highlights
- Revenue: In 3Q 2024, the company reported a revenue of US$150 million, a 76.3% year-on-year (YoY) growth, supported by growth in the subsea transportation and installation services and decommissioning services. On a quarter-on-quarter (QoQ) comparison, revenue was slightly down by 5% due to the completion of decommissioning contracts in the United Kingdom (UK) and Thailand.
- Net Profit: The net profit for 3Q 2024 was US$1.1 million, an 84% YoY drop. The company saw a forex loss of US$2.7 million due to unfavourable movements of the US dollar against the Thai baht.
- Profit Margin: Excluding the forex loss, the core earnings before interest and taxes (EBIT) margin improved by 60 basis points QoQ, driven by a higher gross margin and lower administrative expenses as a share of revenue.
Operational Performance
- Fleet Utilization: The IRM fleet achieved 87% utilization in 3Q 2024, the highest utilization so far this year, albeit down from 100% in 3Q 2023. The YoY drop was due to its DSV Mermaid Endurer transitioning between two projects in Saudi Arabia and Qatar.
- Decommissioning Projects: The end of decommissioning charters in the UK and Thailand impacted revenue, with renewals expected only from March 2025 due to seasonal slowdowns in the fourth quarter.
- Orderbook: Mermaid Maritime continues to execute on its orderbook of US$814 million. The company has secured multiple project awards in the Southeast Asia, the Middle East, the North Sea, and Western Sub-Saharan regions for both the short-term and the long-term through to FY2026.
Future Prospects
- Revenue Growth: There is potential for revenue growth if Mermaid Maritime secures key cable-laying and IRM orders in the Middle East and West Africa, which are in the final stages of negotiation. Additionally, plans to reactivate the cold-stacked DSV Mermaid Commander in 2025 could further boost revenue.
- Forex Gain: The US dollar has rebounded by approximately 7.5% against the Thai baht since the end of September, which is expected to result in a forex gain of US$1.5 million in 4Q 2024.
Moving forward, investors should watch for new order wins, higher-than-expected fleet utilization, and fleet expansion as catalysts for the stock. Potential downside risks include lower-than-expected oil prices affecting day rates and fleet utilization, as well as order cancellations.
Disclaimer: ProsperUs Manager of Content, Hailey Chung, does not own shares of the company.
References
CGSI Note | Mermaid Maritime | Nov 16, 2024
SGX | 10 in 10 with Mermaid Maritime | Nov 12, 2024
Mermaid Maritime | 3Q 2024 Results Presentation | Nov 13, 2024
