The selling is based on two things in my view: 1. Risk that they will disappoint on second half earnings, given they have flagged soft first half, we await their outlook statement soon to confirm full year earnings 2. More fundamental reevaluation of the business: it is a high fixed costs business (fleet etc) and they have made big investments in new vessels in recent years. So idle vessels mean trouble, even under utilised vessels are trouble, because the AVERAGE costs of running them rises when they are not FULLY engaged for the year. Supply base earnings help but the vessel business is the mainstay.
Overall I think MRM has reverted to the mean long term P/E one would expect for such a business in this kind of sector. I am a committed holder and not disappointed with this sober view, having been a holder for the last 9 years.
MRM Price at posting:
$2.82 Sentiment: Hold Disclosure: Held
