Macro Polo Marine Presentation February 2012

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Contents

Company Profile 1

Key Drivers 2

Valuation Model 3

Risk Analysis 4

Recommendation 5

Macro Polo Marine Company Profile

Growing integrated marine logistic group principally

engaged in:

o Ship chartering business; i. Offshore Supply Vessels (OSVs) – Anchor Handling Tug

Supply Vessel (AHTS) for Oil and Gas industry

ii. Tugboats & barges for mining, commodities, construction

industries

o Shipyard business; building, repair and broking

services of tugboats and barges

Offshore & Marine Value Chain

(Upstream)

Upstream

• Exploration

• Production

Midstream

• Processing

• Transportation

Downstream

• Refining

• Marketing

Business Model

Value adds primarily to Upstream – Exploration

segment

Marco Polo Marine

Shipping

Tugs & Barges

Offshore Services

Shipyard

Shipbuilding Repair &

Maintenance Conversion

Revenue

(S$’M)

2008 2009 2010 2011 2012

Shipbuilding

& Repair

25.8 27.6 31.8 52.2 69.3

Ship

Chartering

20.1 26.9 32.5 30.8 20.5*

Total 45.9 54.5 64.3 83.0 89.8

Revenue Breakdown

*Revenue dropped from 2011 due to acquisition of PT Pelayaran Nasional Bina

Buana Raya Tbk (“BBR”) to comply to Indonesian Cabotage law (to be explained later)

Source: Company Data, FY 2012

Earnings Trend

• Revenue and profits have been increasing consistently

20

30

40

50

60

70

80

90

100

Reven

ue (

S$ M

illi

on

s)

Sales

0

5

10

15

20

25

Net Profit (S$ Millions)

Earnings

Key Drivers

Indonesian Cabotage Laws - opportunity for domestic

players

Booming Offshore Marine Sector in Asia feeding growth

for support industries

Strong management

background and technical

capabilities to leverage on

opportunities

Indonesian Cabotage Laws

Under the Cabotage Laws, only Indonesian Flagged

ships can legally operate within Indonesian waters

Effectively shuts out the international players,

leaving domestic players

with current assets in a strong

position to fill the gap

Booming Offshore Marine Sector

Growing Energy Demand and Ballooning Fuel Subsidies

Fast growing energy demand and persistent high fuel prices

have caused Indonesia government US$21.67 Billion in 2012,

54% more than budgeted

Government forced to open up

for more investment to ramp up

domestic production to bring

budget deficit under control

Source: Reuters

Booming Offshore Marine Sector

New exploration means deeper waters

More advanced and reliable support vessels are required for

deep sea operations,

• Allows ship chartering companies to command higher premiums

over the current 20% premium seen in Indonesian over regional

peers

BP Migas (ex Indonesia Oil and Gas regulator)

estimated 235 Offshore vessels by

2015, of which AHTS would constitute

58 of the total

Source: Deutsche, BP Migas

Booming Offshore Marine Sector

Strong Management & Capabilities

Strong team track record

Under CEO Sean Lee, the team successfully ventured into new

business and consistently achieve record profits for the company

Managed to attract Mr. Cheam Yeow Cheng, an industry veteran of

>20 years experience previously from Pan United

Third Dry Dock in operations and successfully installed

Dynamic Positioning System 3 (DP3)

The technical abilities of the shipyards allows the company to

leverage its expertise and capacity to undertake higher value-adding

new contracts.

Source: DMG

Valuation Methodology

Ship building & repair

BU

Ship chartering

BU

Ship building

business

slow down

Just added

new dry dock

Build to charter

Indo chartering

business bullish

Ability to build =

ability to expand

economically

Financial model

• Relatively flat

revenue, estimated

slow growth of 2%

Key Assumption

• Expansion rate of 1.5

OSV vessel per year

• SG$ 712k annual rev

per vessel

Forward P/E

approach

DCF

approach

Valuation Methodology

Forward P/E

1. Estimated forward P/E of 9x

2. Modeled 2013 EPS = $0.08

Fair Price = 0.70

Current P/E (x)

Marco Polo Marine Ltd 6.64

ASL Marine Holdings Ltd 8.34

ES Group Holdings Ltd 5.89

Sembcorp Marine Ltd 16.05

Nam Cheong Ltd 10.33

9.45

DCF

1. Assumptions

2. Cash flow

- 2013: $31.8m

- 2014: $32.1m

- 2015: $32.3m

- 2016: $32.5m

- 2017: $32.7m

- PV Terminal Value of $397.7m

Fair Price = 1.26

WACC 8% Debt % 28% Equity % 72%

Cost of Debt 3% Cost of Equity 10% Beta 1.07 Tax rate 15% Market rate 10% Risk free rate 1.5% Long term growth 2%

• Perpetual growth model (TV) is only suitable for

companies with stable cash flow

• TV accounts for large chunk of the total valuation and

is highly sensitive to assumption

Sensitivity Analysis

Bear case Base case Bull case

1. Annual rev per charter vessel 676k (-5%) 712k 748k (+5%)

- fair value 0.67 0.70 0.73

2. Charter fleet expansion rate 1.0 (-33%) 1.5 2.0 (+33%)

- fair value 0.69 0.70 0.71

3. Overall net profit margin 29% (-10%) 32% 35% (+10%)

- fair value 0.63 0.70 0.77

Fair value range of S$0.63 to S$0.77

Risk

Regulatory Risk

Examples such as the Cabotage laws as well as the

dissolution of BP Migas

Highly Cyclical Nature

Potential oversupply of support vessels

Collapse of energy prices will reduce oil and gas

exploration and production activities

Risk

Small Cap

Small caps are tends to be more volatile and would

react quicker to market selloff

Liquidity

MPM’s current ratio at 0.79, lower than 1.1 and 1.06

for ASL Marine and Wintermar Offshore respectively

(excluding off-balance sheet guarantees)

Source: Bloomberg and Company Annual report 2012

Conclusion

Macro Polo Marine…

Riding on increasing demand for energy in Indonesia

and Cabotage Law

Strong management team with good track record

and advance technological capabilities

Potential upside in valuation, with key downside risk

in execution of strategy