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Miclyn’s success at sea

Miclyn Express Offshore Limited (ASX: MIO) is remaining afloat as the S&P/ASX200 index (^AXJO)(ASX:XJO) sinks two days in a row.

Miclyn Express Offshore (MEO) is a leading provider of service vessels to the expanding offshore oil and gas industry throughout the Middle East, Asia, Africa, Australia and in international waters. The company has a reason to be pleased with itself after again winning two Offshore Service Vessel (OSV) contracts.

Having recently been awarded multiple OSV contracts in South East Asia and the Middle East, MEO has accrued seven new contracts since the end of 2012, representing an estimated US $56 million. However, the share price movements have not reflected the company’s ability to win the contracts.

CEO Diederik de Boer said that whilst the company had experienced some “earnings softness” for the FY13 it has been able to play to its strengths with “strong operating performance and customer relationships”  although MEO’s share price has reflected these “soft earnings” with a 16% decline since the New Year.

With a market capital of around $580 million, MEO’s recent contracts could yield significant revenue for the company. For the first half of FY13 MEO reported EBITDA increased only 1% from the previous corresponding period and cited higher depreciation costs for its 10% loss after taxes.

Excluding work in Iran, MEO expects a flat or marginal decline in FY13 but a return to growth in FY14. With a P/E ratio of 10, the company is moderately priced and pays a dividend of roughly 2.5%.

Foolish takeaway

MEO remains in many long term investors’ portfolios and with an appetite for taking on bigger contracts, Foolish investors could do worse. However, patience is a virtue for investors and timing your investment will be the difference between a black or red portfolio. If MEO competitor Matrix Composites and Engineering Limited’s (ASX: MCE) past 12-month 65% loss is anything to go by, investors will be wise to take their time before jumping aboard.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

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