ASX:MRM
MMA Offshore Ltd
Investment Summary
The fund managers believe that MMA Offshore Ltd (MRM) represents an attractive investment due to its diversified exposure to both traditional oil & gas projects and the growing offshore wind farm sector. The company faced a significant decline in share price during the downturn in oil & gas, but the fund managers saw value in its assets, buying in at a deep discount to net tangible asset (NTA) value. Since 2021, improvements in demand and utilization rates have led to a substantial recovery in the company's performance, with an increase in EBITDA and fleet utilization. This progress has narrowed the gap between the share price and NTA, and the fund managers remain optimistic about MRM’s prospects, particularly given its exposure to renewables. They believe the company’s intrinsic value is higher, with a target price of around $1.50. However, they have reduced their exposure in light of the increased risk driven by higher prices.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Collins St Asset Management
Date
31 Dec 2022
Price
Unknown
Medium
Quarterly Report
Commentary
Collins St Value Fund continues to hold MMA Offshore (MRM) due to the company’s strong positioning in both traditional energy and the growing offshore wind farm sector. With exposure to offshore oil & gas rigs and renewable energy, MMA provides essential services for the construction, maintenance, and relocation of offshore platforms and infrastructure. While the company has historically experienced volatility, recent improvements in equipment utilisation and day rates have led to a significant rise in share price, from around 35c to 75c. In the most recent update, MMA reported a 70% increase in first-half EBITDA and an improvement in fleet utilisation rates, further boosting market confidence. Collins St Value Fund remains optimistic about MMA’s future, particularly given its increasing leverage to the evolving energy sector. With current cash flows and growth prospects, the Fund believes the company has an intrinsic value of approximately $1.50.
Collins St Asset Management
Date
30 Sept 2023
Price
Unknown
Medium
Quarterly Report
Commentary
Collins St Value Fund continues to update its investment thesis on MMA Offshore Ltd, having initially invested when the company was trading at a deep discount to its Net Tangible Asset (NTA) backing. Historically reliant on offshore oil and gas projects, MRM faced significant challenges following the sector downturn in 2013, with its share price falling from $24 to just 24c by 2021. However, as offshore oil and gas markets rebounded, asset utilisation rates improved, and demand for essential equipment surged, the fund identified a compelling opportunity. Entering at an average price of approximately 33c per share, Collins St Value Fund saw strong potential for a recovery, particularly as MRM was trading at just 30% of its NTA. Since then, the industry’s revival—coupled with growing investment in offshore wind farms, which now contribute 20% of MRM’s revenue—has driven a material re-rating of the stock. With the NTA discount largely closed and share prices rising, Collins St Value Fund has significantly reduced its exposure, reflecting a reassessment of risk relative to reward. While the company remains well-positioned for future growth, particularly in renewables, the fund remains focused on identifying the most attractive risk-adjusted opportunities.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.