Weekly Stock Buy: Miclyn Express Offshore (MIO)

Weekly Stock Buy: Miclyn Express Offshore (MIO)

Weekly Stock Buy: Miclyn Express Offshore (MIO)

Miclyn Express Offshore (MIO) is a leading provider of service vessels to the expanding offshore oil and gas industry across South-East Asia, Australia and the Middle East.

The company supplies services to energy companies across the development cycle – from budding explorers to existing producers. MIO’s fleet consists of Offshore Supply Vessels, Crew/Utility Vessels, Tugs, Barges and Coastal Survey Vessels.

The company has managed a high utlilisation rate of its fleet, many of which are deployed on long-term contracts.

MIO has gone from strength to strength since floating in early 2010, capping off its growth with a 26% jump in 1H12 net profit from the prior corresponding period.

In the right industry

MIO’s indirect exposure to the energy sector gives it some leverage to oil prices.

As the price of oil strengthens due to Middle East supply concerns and an improving macroeconomic backdrop, major energy companies have incentive to accelerate production and exploration plans.

The increased focus on developing oil fields creates demand for energy infrastructure, and MIO is ideally placed to cater for this demand.

Impressive results

In February, MIO reported a knockout result in which 1H12 net profit rose 26% on-year to $33.1 million.

Revenue surged 74% to $126.2 million, driven mainly by an expansion of its fleet services. Utilisation rates strengthened from 78% in 1H11 to 85% in 1H12, reflecting the high demand for MIO’s services.

Among MIO’s key divisions, Offshore Support Vessels saw a 10% rise in gross profit, whilst Crew/Utility Vessels gross profit jumped 22% due to high utilisation rates and contributions from newer vessels.

The biggest growth came from MIO’s Third Party Vessels segment. Divisional revenue growth of more than 700% saw this business line become a prominent component of overall revenue.

MIO expects Third Party Vessels to continue its growth into FY12 and FY13 due to potential upcoming projects. This is notable considering this division requires no capex and additional overheads (implying revenue growth at little cost).


MIO was upbeat about the outlook for FY12, citing the growth in Australian LNG projects as well as the expanding opportunities in South East Asia.

Higher oil prices are driving activity in the energy sector, and MIO can therefore expect increased demand for its services.

The company’s healthy balance sheet and high profit margins were also on display in the 1H12 results.

We expect these factors will continue to underpin MIO’s shares and will be a stock to watch for a while yet.

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