# MRM - MMA Offshore



## LifeisShort (1 February 2007)

Anyone following this stock. There was a breakout 2 weeks ago from low 90c to todays 1.23. It moved over 6% today. I like the company as it is in a niche market and it is in the process of merging with P & O creating a very nice company. IMO it has started to move as perhaps merger is close to completion and helf yearly results are due....


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## son of baglimit (29 October 2007)

*Re: MRM - Mermaid Marine*

any MRM holders want to contribute their thoughts on todays article in AFR regarding possible future merger with NMS.


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## Dukey (29 October 2007)

*Re: MRM - Mermaid Marine*

Ha!  was just about to bump this one too SOBL!!
- regarding James Packer buying 7% stake in MRM back on Sept 17.
Have only just had a look at these guys now after a friend mentioned them.
...  interesting.   will keep digging on these guys...

- didn't see the article you refer to - got a link?? by any chance.


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## son of baglimit (29 October 2007)

*Re: MRM - Mermaid Marine*

"NEPTUNE PREPARES TO DIVE INTO NORTH SEA SERVICES"

Oil and gas engineering company Neptune Marine is preparing to reveal its eighth bolt on acquisition in just over a year and observers increasingly beoieve a more ambitious union with fellow player Mermaid Marine is required to add true critical mass.

Neptune is shortly expected to announce its latest acquisition, a company servicing the oil and gas platforms of the North Sea. The latest buy is expected to have cost $20-30 million.

The global shopping spree initiated by managing director Christian Lange since he joined the company in February 2006 has resulted in the company add engineering and surveying arms to to its core underwater welding business, as well as establishing a foothold in North America.

The build-up has added dramatically to the company's income stream, with its September quarter revenue of $18.3million eclipsing the 2007 full-year result of $15.5 million. 

Neptune's share price has tripled since the start of the year, with its market capitalisation now more than $200 million.

Both Neptune and Mermaid provide services to the oil and gas industry but they do not directly compete.

While Neptunes' core businesses are diving , engineering and surveying, Mermaid provides ships that help service offshore oil and gas operations.

Mr Lange acknowledged the synergies that might result from a union with Mermaid, he was reluctant to comment further. 

Hartleys analys Helmut Engelhard said the services offered by Neptune and Mermaid were complementary but said Neptune would need to ensure its suite of acquisitions was properly integrated before making overtures to Mermaid.

"Mermaid would be a big step for them and I'm not sure whether Mermaid shareholders would agree that Neptune are the best ones to drive Mermaid's assets", he said. "I take my hat off to Neptune for what they have done so far, but they still need to prove that they can tie it all together and prove that the whole is worth more than its parts".

The rising oil price has been a particular boon to oil and gas companies specialising in maintenance and repair work, with the higher prices extending the lives of wells and increasing the need to keep ageing equipment maintained.

Mr Lange said he hoped to build Neptune into a service company that would fulfil roles now carried out by a range of competitors, with the Australian range of services ultimately to be offered from bases in North America and the North Sea.


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## garfish1 (22 May 2008)

*Mermaid Marine MRM*

I am a holder of MRM and I am considering the share rights issue at $1.45 per share closing 16 June.  Any comments about MRM?


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## orr (22 May 2008)

*Re: MRM - Mermaid Marine*

I have in front of me the copy of the three resolutions to be put forward at the 16 June MRM extraordinary meeting;
*resolution 1-   sets out shares already  paid for as of May 8.  
*resolution 2- for 4,704,975 'shares will be to' at 1.45 to 'persons who are not related parties to the company'..
 My question here is , As a share holder am I related to the company?
*resolution 3- Shares to board members
 I've participated in two previous share holder issue's With MRM and been able to buy on market cheaper, at a later date, but they've always done well over the longer term. I've been a holder for over six years .


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## fordxbt (22 July 2008)

*Re: MRM - Mermaid Marine*

bullish writeup today on compareshares i dumped out a long time ago though
http://www.compareshares.com.au/wise63.php


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## surf73 (1 May 2009)

*MRM Mermaid Marine*

Hi.

I'm new here and admit that I don't know much about financial stuff. However, I do pretty well trading with common sense, (and guessing what people need).

If Gorgon gets the go-ahead - there's going to be a lot of modules / equipment going up to Barrow island in the next few years.

Mermaid Marine's looking pretty good to me.

They own a heap of tugs and barges in Dampier and it looks like their nearest competition is in Singapore.

Anyone else have some thoughts on this?


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## nomore4s (1 May 2009)

*Re: MRM - Mermaid Marine*

Hi Surf,

I don't know anything about the fundamentals but I posted  a chart in another thread the other day.

The pattern is still intact and overall looks pretty bullish atm.


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## orr (20 May 2009)

*Re: MRM - Mermaid Marine*

Skilled Group (SKE) made an announcement last week of a contract tie-in with other marine  service companies from asia to service aspects of Chevrons Gorgon north west shelf activities, to the value of $350 mill http://imagesignal.comsec.com.au/asxdata/20090515/pdf/00953288.pdf
Their (ske) share price went nowhere, last I looked.


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## BraceFace (17 September 2009)

*Re: MRM Mermaid Marine*



surf73 said:


> Hi.
> 
> I'm new here and admit that I don't know much about financial stuff. However, I do pretty well trading with common sense, (and guessing what people need).
> 
> ...




I think these comments pretty much hit the nail on the head. I only wish I has bought MRM when it this was posted at about $1.50
Hit $3.00 today and trending upwards.
This Gorgon project is MASSIVE. Lookout for companies like MRM who already have contracts locked in to do well on the back of this. Interesting article in the West Australian this week that listed about 10-15 companies in such a position.


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## surf73 (17 September 2009)

*Re: MRM - Mermaid Marine*

Thanks for that compliment.

MRM has been great to me.

A few yrs ago I made 40% profit in 3 months, (about the time that P&O were looking at them).......and I sold them all and bought a car.

I bought again this May - and last month I sold them all again, (doubled my money in about 3 months) and put a deposit on a house.

I don't hold MRM right now - and am wondering if I should push my luck one more time.


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## surf73 (17 September 2009)

*Re: MRM - Mermaid Marine*

p.s.
I work in the oil and gas industry in Perth and am under the impression that the unions are (rightly) very territorial here in WA.

I'd be suprised if Asian vessel owners could do Gorgon without involving the locals, (i.e. Mermaid)........

That's my opinion.


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## Bhenn (17 September 2009)

*Re: MRM - Mermaid Marine*

I like this company a lot given it's prospects with Gorgon and run over the last 6 months. The secretary where I work of all people alerted me to it after she had a small punt on it about 6 months ago. Obviously trending up dramatically. I'll disclaim now that I don't own but intend to buy MRM on potential dips over the next little while, and for those who don't read Smart Investor Magazine (not that they are the gospel) MRM was recently given the big thumbs up. So disclaimer, just stating what is readily available and personal opinion.


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## ryan_wheatland (8 April 2010)

*Re: MRM - Mermaid Marine*

There is no doubting that MRM is a solid company, however a bit too expensive at the moment, i'll be keeping a close eye on the P/E ratio and waiting for a major drop in the market to nab this one. It looks like the growth over the next few years has already been factored into the share price. In comparison, NMS's P/E is just over 6 times, and with the new aquisition of STS and the fleet of new ROV and support vessels, synergies will most likely kick in over the next half year, stealing mkt share from MRM.


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## GG999 (19 March 2012)

*Re: MRM - Mermaid Marine*



ryan_wheatland said:


> There is no doubting that MRM is a solid company, however a bit too expensive at the moment, i'll be keeping a close eye on the P/E ratio and waiting for a major drop in the market to nab this one. It looks like the growth over the next few years has already been factored into the share price. In comparison, NMS's P/E is just over 6 times, and with the new aquisition of STS and the fleet of new ROV and support vessels, synergies will most likely kick in over the next half year, stealing mkt share from MRM.




NMS hasn't done well of late  - any chance of a comeback? 

 if one would choose between the two I guess the choice is MRM - according to commsec PE is 13.5 - probably reasonable


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## Out Too Soon (21 January 2013)

*Re: MRM - Mermaid Marine*



GG999 said:


> NMS hasn't done well of late  - any chance of a comeback?




Yes, eventually & this is eventually


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## wombat40 (21 January 2013)

*Re: MRM - Mermaid Marine*

Maybe or maybe not..ive been in this 1 for 2 weeks...they just aquired a new boat for service in the gulf .(big deal lo)..but it does look good.. got a stop at $3..


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## Out Too Soon (30 January 2013)

*Re: MRM - Mermaid Marine*



wombat40 said:


> Maybe or maybe not..ive been in this 1 for 2 weeks...they just aquired a new boat for service in the gulf .(big deal lo)..but it does look good.. got a stop at $3..




Time to move that stop north, sp has reached $4 today


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## minhla (23 May 2013)

*Mermaid Marine*

Mermaid Marine shares are sliding down, major share-holders are desserting.Any Reasons. Please respond?


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## burglar (23 May 2013)

*Re: Mermaid Marine*



minhla said:


> Mermaid Marine shares are sliding down, major share-holders are desserting.Any Reasons. Please respond?




I believe you have it back-to-front.

Major shareholders BTT and WBC are deserting, 
thereby causing selling pressure.

My guess, FWIW; their clients are running to cash, 
ahead of an anticipated correction or downturn!


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## Country Lad (23 May 2013)

*Re: Mermaid Marine*



minhla said:


> Mermaid Marine shares are sliding down, major share-holders are desserting.Any Reasons. Please respond?




minhla, welcome to the forum.  Each company has its own thread otherwise we will have comments about the one company all over the place.

The Mermaid Marine thread is  over there 

Cheers
Country Lad


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## shouldaindex (9 December 2014)

The most interestingly valued stock on the ASX to me.

I don't know enough about the industry, but have been looking for their medium to long term strategy once LNG construction finishes up here.


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## System (10 December 2014)

On December 10th, 2014, Mermaid Marine Australia Limited changed its name to MMA Offshore Limited.


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## Wysiwyg (1 February 2015)

shouldaindex said:


> The most interestingly valued stock on the ASX to me.



 I agree that there is a great difference in market pricing this stock when the last financial year report had their Net Tangible Assets per share at $1.95. Share price seven months later at 80 cents. A ~please explain the price action~ from ASX Compliance last week had a response that Operating Profit before tax for the past 6 months was in line with market expectations at $55 million. This information could have settled the sentiment but irrationality was still evident in pricing afterwards. 

The last FY dividend of 12.5c f.f. is attractive at current price but may not be as high this year. Obviously MRM have been bundled into the mining/oil & gas services death list after coming off a high of $4.10 in 2013. The sharp decline in the price of oil and the ensuing announcements of lesser drilling commitments from the big oilers has exacerbated the markets negative perception of MRM. The acquisition of Jaya will contribute fully this year but the future for offshore oil/gas services is looking dim. 


Interest : took a 5k position at 80 cents.


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## pixel (6 February 2015)

MRM has tested $1.90 support 4 times, crashing through on the 4th.
If you haven't heard of the "4th attempt breakout". check this site: http://bartrade.biz/trades/hvn.htm
It is equally powerful in a downward direction, and I've applied it to MRM's 2014 chart (using sem-log scaling too)





In my experience, the drop will at least double the range from top to baseline (marked by 1...4)
The alert at the 200% line did fire, but MRM failed to follow through. Even at 323%, it failed to produce a HL-HH sequence.

The most recent Low, however, is now supported by a Bullish Divergence in the momentum (MACD) chart. I'm till waiting for the HL-HH sequence that would confirm a turn of trend' I will not be buying before I see that.


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## Wysiwyg (12 February 2015)

Not a funnymentalist but it doesn't take a tertiary education to see this company continues to be undervalued based on a Book Value of $2.00. I know the sector is facing headwinds with gas/oil projects moving to production, oil price down and the lesser need for specialist marine services, but is the market marking this company down accurately? I believe not but irrationality outstays the most ardent objector.


Interest : not holding.


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## Wysiwyg (23 February 2015)

Forecast not good with worse 2H of FY announced by MRM due to low crude oil price and consequent lower exploration and development.


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## Wysiwyg (25 June 2015)

$100 M contract win for Mermaid announced today. Would be fantastic to see this announcement turn the company around. Sellers stacked up on cue so a bit of gnawing before breaking higher in my opinion.

Interest - back in today .605

Chart of down channel.


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## Wysiwyg (26 June 2015)

Share price reacted differently this time and dived back to where it bounced from. Overall market drop contributed somewhat and forced my exit today. Aggressive selling today.


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## Miner (4 July 2015)

Wysiwyg said:


> Not a funnymentalist but it doesn't take a tertiary education to see this company continues to be undervalued based on a Book Value of $2.00. I know the sector is facing headwinds with gas/oil projects moving to production, oil price down and the lesser need for specialist marine services, but is the market marking this company down accurately? I believe not but irrationality outstays the most ardent objector.
> 
> 
> Interest : not holding.




Just visiting this thread and noticed you took a position at 80 cents and on this thread - not holding. With current price of MRM you must be chuckling for a great decision made 
DNH


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## Miner (4 July 2015)

Wysiwyg said:


> Share price reacted differently this time and dived back to where it bounced from. Overall market drop contributed somewhat and forced my exit today. Aggressive selling today.




I just realised you are the only person who has been selling and buying on MRM 
Have a nice weekend (probably morning of yours now)


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## Wysiwyg (5 July 2015)

Miner said:


> I just realised you are the only person who has been selling and buying on MRM
> Have a nice weekend (probably morning of yours now)



Yes got drawn into the divvy trap at 80 cents and thought the low must be close but business is slow for MRM so I'm thinking it will one of those bottom bouncing stocks now. Better stocks around at the moment.

Any view of Madagascar?


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## Miner (6 July 2015)

Wysiwyg said:


> Yes got drawn into the divvy trap at 80 cents and thought the low must be close but business is slow for MRM so I'm thinking it will one of those bottom bouncing stocks now. Better stocks around at the moment.
> 
> Any view of Madagascar?




Well
I can not read Malagasy or understand. But no where found any details of the business for sale at Madagascar . so waiting to get more info from company.


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## Wysiwyg (10 November 2015)

A damning trading update today saw the share price slammed down. December/January a particularly difficult period "with a low level of visibility of demand for the second half of the financial year". To think they were valued at $4 but yet another company suffering low oil/gas exploration/construction. They also bought into Jaya at the wrong time which has probably compounded the situation with all those extra vessels with no work. Todays price, 29 cents. Future price I would hate to guess but no exploration due to low oil price is damning. The demise from 2013  ......


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## Faramir (10 November 2015)

Is the time to be a contrarian? Is there anything positive about MRM? I can't remember why I have this on my watchlist? Do I have the time to read any of its reports or would a quick glance at a chart with zero knowledge, tell me not yet? Less than 10% of its high of 2013. Something dramatic has happened.
Better study some other company. No funds available; can not to be a contrarian at the moment.


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## skc (11 November 2015)

Faramir said:


> Is the time to be a contrarian? Is there anything positive about MRM? I can't remember why I have this on my watchlist? Do I have the time to read any of its reports or would a quick glance at a chart with zero knowledge, tell me not yet? Less than 10% of its high of 2013. Something dramatic has happened.
> Better study some other company. No funds available; can not to be a contrarian at the moment.




Yes and no. You probably have it on the watchlist because it's trading at a very low multiple and price/NTA.

The ships they have are worth a lot on the books ($1B in fixed assets, despite the fact that vessels are not fixed by any means). Debt is around $440m so you are looking at a theoretical book value of $1.50 per share.

However, this $1B fleet is not bring in much earnings, and there's excess capacity everywhere in an industry where demand is falling off a cliff. A fire sale of the vessels (if there's a market at all) will quickly reduce a good part of the NTA margin. So if vessels are sold @ 60% of book value, you get net equity of ~$150m after debt, compared to market cap of $90m @ 24c.

This would all work pretty well IF MRM can actually survive the banking covenant. Any further deterioration in the EBITDA (which is more than possible due to the low earning visibility) might see a breach and who knows what happen after that.

MRM with it's current fleet can potentially earn >$60m at the cycle's peak. The question is if the peak is ever coming back, and if MRM will survive to see it again. 

To invest now would probably require assumption of total loss. Or one can potentially wait until the balance sheet issue is fixed before taking a position.


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## luutzu (11 November 2015)

skc said:


> Yes and no. You probably have it on the watchlist because it's trading at a very low multiple and price/NTA.
> 
> The ships they have are worth a lot on the books ($1B in fixed assets, despite the fact that vessels are not fixed by any means). Debt is around $440m so you are looking at a theoretical book value of $1.50 per share.
> 
> ...




It would be immoral to not back up the truck and load up on this one


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## skc (11 November 2015)

luutzu said:


> It would be immoral to not back up the truck and load up on this one




Lol. It would be irresponsible to your own financial well being to ignore the risks.

Take a look at the likes of BLY, EHL, BOL, BKN etc.... they all went through a similar phase. Share price in free fall, historical PE at low single digit and looked attractive and appeared to be a screaming buy for the uninitiated. On the other hand, they all have balance sheets filled with physical assets funded by debt, purchased at the peak of the cycle, idling in the yard. When the cycle turned down, volume fell as fast as margins. The operational leverage of high fixed cost, low op ex worked perfectly in reverse. This means that every competitor price their service at cash costs and hope the cycle turns before the bankers get cold feet and call in the loans. 

Back to MRM: It seems totally ridiculous that it is STILL spending capex and building new vessels, At a time when they should be conserving cash and the existing fleet is at 50% utilisation. Did they only win the tender on the promise that they will be deploying a spanking new ship? If so what's the point of bidding for that project?!


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## shouldaindex (11 November 2015)

Gamblers need their hit, money is just a bonus.


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## Faramir (11 November 2015)

Thank you skc, luutzu and shouldaindex for yoir comments. Another big drop today. Definitely staying away.


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## ThirtysixD (11 November 2015)

I had a good read through financials today and came to the conclusion that MRM is most likely finished.

I will be surprised if they do not breach covenants soon. In the event of a liquidation less than 20% of book value is much more realistic (i.e debt wont even be paid off)


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## luutzu (11 November 2015)

ThirtysixD said:


> I had a good read through financials today and came to the conclusion that MRM is most likely finished.
> 
> I will be surprised if they do not breach covenants soon. In the event of a liquidation less than 20% of book value is much more realistic (i.e debt wont even be paid off)




stop, you're scaring me  

You read the 2015 Annual report right?


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## skc (12 November 2015)

luutzu said:


> stop, you're scaring me
> 
> You read the 2015 Annual report right?




If you have time, could you do a valuation of MRM using your DangInvestor service... both now and 2 years ago?

I am interested to see what the calculator shows.


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## luutzu (12 November 2015)

skc said:


> If you have time, could you do a valuation of MRM using your DangInvestor service... both now and 2 years ago?
> 
> I am interested to see what the calculator shows.




Will do. But let me finish loading first, I'll be more convincing then  And it'll be more bang for our entertainment buck too.

Regarding the new capex for the 5 newbuilds. It's a good strategy, bad timing but we can't all predict the future and I imagine these ships tend to take a couple of years' lead time to design and build... But good strategy in that MRM moves towards more specialised vessels, which will give it a greater competitive advantage; with regards to the two PSV for INPEX... it was specified by the client and will be contracted for 5 years term once delivered, with a further 10 years options.

Interesting to note that payment by MRM on these 5 alone is somewhere around $200M. Compare that to its entire market cap of $90M?

The NTA at $2.10 ps is post the $120M impairment charge; add that back and it'd be $2.40 ps. 

While impairment charges might be legal, it's not exactly them taking the sledge hammer or the torch to these assets right?

But let's assume there will be further impairment in FY16, bringing it down to $1.00 ps... 4 times current price?


We all know that... critical question is whether MRM will survive the coming winter, then the summer drought. Not breaking its debt covenant and forced to do a Santos. I'm happy that it can.


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## Wysiwyg (13 November 2015)

luutzu said:


> The NTA at $2.10 ps is post the $120M impairment charge; add that back and it'd be $2.40 ps.
> 
> But let's assume there will be further impairment in FY16, bringing it down to $1.00 ps... 4 times current price?



In a controlled sale and especially a firesale, tangible assets would unlikely be realised at the perceived value. Valuers are a sketchy lot.


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## luutzu (13 November 2015)

Wysiwyg said:


> In a controlled sale and especially a firesale, tangible assets would unlikely be realised at the perceived value. Valuers are a sketchy lot.




Yea, agree that it's not the best time to sell assets. But vessels has a global market compare to, say, trucks or cranes where you can only sell within the landmass. With ships, just send a small crew and deliver it cheaply anywhere.

So might not be as bad as the miners or mining services companies in a fire sale.

Also quickly looked up a few similar vessels like MRM's and they're advertised at around $10M US... those were older vessels than MRM's on average.

----

I've looked at its ability to keep going and pay its due... it's in a pretty good financial position given the downturn. It's not going to go broke. 

Business is bad, will get worst next year or two... but that's why it's shares goes for so cheap. If it's all blue skies it won't be at this fire sale price.

Another potential we might forget is MRM being a takeover target, or management buyout. Great opportunity for a strategic buyer wanting to expand into SEAsia and Australia for cheap.


So as a going concern I'm fine with its business and financials; as a potential target it might be looking very tasty.

Could be wrong and get stuffed on this for a while, but then you can't really just ignore your approach when it said go for it.

Investing is not as easy as it look.


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## luutzu (14 November 2015)

Some thoughts on MRM's financial position and why I believe it would do alright despite the expected decline in offshore Exploration and Construction.

Managed to get some today at 22 cents, so a good gain. But had also bought some at 45 cents though managed to averaged it down to 28 cents so am happy with it; Also got some for meself and me brother at 40 cents last Friday before the big drop this week... had a pleasant time explaining to him and his girlfriend why I can't see the drop to 30cents on Tuesday... probably won't see her again until... maybe never 

But the 3 directors had bought about 1.8M shares at around 24 cents so maybe it would work out fine, maybe... they did also bought in at $1.50 last year.

----

The main objective is not so much to estimate MRM’s earning power, though that will be done when we put an estimate on its value. Aim is to see if this mermaid will survive the winter.

*MRM's Solvency:*
At first glance, there are signs of deterioration in MMA's ability to meet its current liability (that is, whether or not it could pay its current obligations without the need to sell long term assets). This can be seen in Solvency chart (tab1.1) where the cash, quick and current ratios show a sharp decline from 2014 to 2015.







Taken at this first glance and we can comfortably conclude that MMA is in fairly good shape at the 2015AR:
- Cash Ratio of 0.55 is inline with 2012 and 2013. We ought to ignore 2014 as new debt and new equity were raised for the Jaya acquisition.
- Quick & Current Ratios of 1.47 to 1.49 show good financial strength. While its previous years' range of 1.8 are better, anything above 1 is fair, anything above 2 show lack of opportunities to invest.

Though condition is expected to further deteriorate into 2016 FY as the 2015 FY only captures some 7 months into the oil crash of late 2014; MMA's financial strength and solvency is not expected to deteriorate to alarming levels.

First, 2015 saw final payment of $112M towards the newbuilds; If we look at the notes and were to redefine liabilities under Unearned revenue of $38M and deposits received $5.9M, bringing this $44M into current assets or remove it from liability will show very healthy Solvency ratios. 

That while these $44M are technically liabilities, they're really advanced payment... ones that could be argued as an asset since the cost to deliver on them might actually be cheaper given the low oil and new enterprise/wage pressures that could be extracted by MRM.
But leaving these adjustment aside, Altman's Z does not show financial distress (it might get there if newbuild Capex were to continue), and Beneish's M do not show manipulation of earnings - with probability of manipulating decreasing in 2015 to 0.16%.



*Debt, Capital Structure & Debt covenant*

Capital Structure (Tab 2.1) further support the company' sound financial position.
With debt ratio showing slight improvement from 2014 to 2015 (from total debt/total assets of 46% down to 45%). 

While this mean that 45% of MRM's capital is currently funded by debt, note that this figure is post the $120M non-cash impairment on its long term assets, and is only 3% to 4% higher than the debt ratio back in 2012-2013 years where the banks and lenders would use to determine the 3.3% interests on the loan they made to MRM.

If we were to add back the $120M non-cash impairment, debt ratio would then be 43%. So the bankers could be convinced to not call on a fire sale of assets.

When we remove the non-interest bearing liabilities (unearned revenues and deposits) from the equation, the interest-bearing debt ratio is a healthy 36% (pink line).





*Cash Conversion*
A further support MRM's strong financial and operating position can be seen in how many times EBIT, its operating profit) could cover interests and lease expenses. 

As Graham and Meredith advised, industrial companies should have its EBIT covering interests expense by at least 2.5 to 3 times. Looking at the ICC chart (tab 2.2) we can see that while Net Operating CF coverage has improved from 5.44 times in 2014 to 10.03 times in 2015, EBIT coverage declines from 8.8 to a less comfortable 3.8 times.

At first glance this decline in EBIT coverage of interests indicate a bleak future, one that will be much darker given the downturn in Australian Oil and Gas exploration and construction activities. However, this figure is misleading.

EBIT in 2015 includes the non-cash impairment of $120M, also include some $112M in final payments for the new build to be delivered at end of calendar 2015 and March 2016... the coverage next year, with the expected headwinds, would still be comfortable.


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## skc (16 November 2015)

Thanks for the analysis luutzu... a few comments:



luutzu said:


> First, 2015 saw final payment of $112M towards the newbuilds;




According to MRM's investor presentation on 18/8/2015, there is a further $130m capex remaining for newbuilds in FY16. FY15 balance sheet showed cash ~$125m, so all of that would be used in FY16 for the committed capex.

Their cash position now (outside of unpaid but committed capex) should be only whatever operating cashflow they can earn since end of FY15, plus any improvement in working capital management they might have achieved. 



luutzu said:


> If we look at the notes and were to redefine liabilities under Unearned revenue of $38M and deposits received $5.9M, bringing this $44M into current assets or remove it from liability will show very healthy Solvency ratios.




That's not the correct interpretation. The $44m in prepayments and deposits are ALREADY in current assets as cash. That's the tenents of double entry accounting. As work demanded by those prepayment is carried out, the amount of the prepayment is reduced... but so is the cash as MRM need to spend cash to carryout the work. Prepayment helps with liquidity but usually not solvency.



luutzu said:


> While this mean that 45% of MRM's capital is currently funded by debt, note that this figure is post the $120M non-cash impairment on its long term assets, and is only 3% to 4% higher than the debt ratio back in 2012-2013 years where the banks and lenders would use to determine the 3.3% interests on the loan they made to MRM.
> 
> If we were to add back the $120M non-cash impairment, debt ratio would then be 43%. So the bankers could be convinced to not call on a fire sale of assets.




The banks are forward looking as much as the market. Back in 2012-13 they were looking at earning growth and healthy cashflow. So just because they were comfortable with the debt ratio back then doesn't mean they are comfortable with the same debt ratio now. The trajectory of the debt ratio is totally opposite. 



luutzu said:


> As Graham and Meredith advised, industrial companies should have its EBIT covering interests expense by at least 2.5 to 3 times. Looking at the ICC chart (tab 2.2) we can see that while Net Operating CF coverage has improved from 5.44 times in 2014 to 10.03 times in 2015, EBIT coverage declines from 8.8 to a less comfortable 3.8 times.
> 
> At first glance this decline in EBIT coverage of interests indicate a bleak future, one that will be much darker given the downturn in Australian Oil and Gas exploration and construction activities. However, this figure is misleading.
> 
> EBIT in 2015 includes the non-cash impairment of $120M, also include some $112M in final payments for the new build to be delivered at end of calendar 2015 and March 2016... the coverage next year, with the expected headwinds, would still be comfortable.




What figure are you using for EBIT? Per management presentation, FY15 EBIT was $87m before impairment. Payment for newbuild is also NOT included in EBIT (it simply gets capitalised into PPE on the balance sheet).

The newly announced EBITDA for FY16 (the full year) is only $75-85m, with low visibility for the second half. This means that MRM will report an EBIT loss for FY16, which throws your EBIT coverage guideline out of the water. Let's say they hit their EBITDA target (a big IF), we are looking at a net debt / EBITDA ratio of some 3.9x for FY16. How does that compare to Graham's guideline?

This is a good article summarising MRM's situation in a forward looking manner, and I draw your attention to this



> Visibility regarding customer expenditure plans remains poor as a low oil prices put pressure on day rates and margins are squeezed, Morgans observes. The broker believes, as a number of high volume contracts roll off in the second half, the balance sheet is coming under renewed stress.
> 
> These contracts include services to Technip for the Wheatstone LNG project and the high-revenue Silja Europa accommodation vessel for Gorgon. While the company has been awarded a new contract by Woodside Petroleum ((WPL)) for three vessels to support production at the North West Shelf, Pluto and AusOil assets, Morgans does not believe this will be enough to lift the company's domestic utilisation rates meaningfully from the current 61%.





luutzu said:


> Some thoughts on MRM's financial position and why I believe it would do alright despite the expected decline in offshore Exploration and Construction.




Best of luck. Looking at your analysis, I'd suggest a quick review to see if some of the figures (both historical and forward looking ones) are indeed correct and still supportive of your thesis. As I said... there is potential, and there is the danger of total loss (and there's a range of outcome in between). And I would size my investment accordingly (and certainly not involve my brother's girlfriend unless I hate her).


----------



## luutzu (16 November 2015)

skc said:


> Thanks for the analysis luutzu... a few comments:
> 
> According to MRM's investor presentation on 18/8/2015, there is a further $130m capex remaining for newbuilds in FY16. FY15 balance sheet showed cash ~$125m, so all of that would be used in FY16 for the committed capex.
> 
> Their cash position now (outside of unpaid but committed capex) should be only whatever operating cashflow they can earn since end of FY15, plus any improvement in working capital management they might have achieved.



Must have missed the additional $130M capex for FY16. Probably thought the $120M investment Weber was on about in his June 2015 Morgan Stanley prez with the "final" payments of $112M in the 2015AR... So good call there skc... but I am still right though - margin of safety and the new work these goes into.

There were 6 new builts, one of them got sold (probably in the 2015AR to the client for, from memory, around $42M... I couldn't find where it was stated, but pretty sure about that figure and sales).

Of the 5 new builts, the two Platform Service Vessels (PSVs, Plover and Brewster) will be delivered March 2016 and head into an initial 5 year contracts with INPEX (slide 9, June 2015 MS prez). This contracts have 2 extension options, bringing the revenue from $160M to potential $500M over next 15 years. 

The MMA Privilege (delivered Aug 2015) was part of the Jaya acqusition and has gone into service in Mexico on 3 year contract.



> Leading offshore energy services provider, Jaya Holdings Limited, announced the long term charter of its first high-specification Multi-Purpose Maintenance and Accommodation Vessel (MPMAV) “Jaya Privilege”...
> 
> Jaya Privilege will commence her charter on delivery and is expected to operate in Mexico for a period of up to three years. She will be the first vessel of her kind in that market and the third from Jaya in Latin America...



http://worldmaritimenews.com/archives/91252/jaya-wins-charter-contract-for-mpmav-jaya-privilege-in-mexico/

So 3 of 5 new, high-spec vessels have found work.

The 2 new Support Vessels (MMA Pinnacle & MMA Prestige) under construction at MMA’s Batam Shipyard and be delivered by Q3 FY2016 have yet to find work. BUT, these two aims at the inspection and maintenance market - one MMA's management is probably right about its growth given major projects offshore are coming online and needing these work for the life of its platforms.

So if we look at the new builts and the capex that has been and are to be spent on them, they were not really a mistake and not even bad timing.

Sure the contracts with them might have been renegotiated and rates reduced etc., but they are not idle and are not heading for the scrap yard.


If we look at the potential new work MMA is bidding for in the Australian market alone (slide 15, Aug2015 presentation you mentioned)... all hope is not loss yet. I mean the new $50M contract with Woodside aren't even mentioned on that list. 

With strong operating cash flow, a couple new jobs so far this half, potentially winning a couple more in H2... and some $50M vessel sales they're targeting (of which $22M has been signed and sold)... Then add to that the cold and warm stacking of vessels that will reduce capex, new agreement with employees etc... 

Cash wise I'm happy with MMA's position next couple of years - this under assumption that oil will remain low and no new investment greenlighted.




> That's not the correct interpretation. The $44m in prepayments and deposits are ALREADY in current assets as cash. That's the tenents of double entry accounting. As work demanded by those prepayment is carried out, the amount of the prepayment is reduced... but so is the cash as MRM need to spend cash to carryout the work. Prepayment helps with liquidity but usually not solvency.




I know a bit about double entry accounting. Did you know... I spent an entire year re-reading the stuff then design the database architecture for data entry of these statements and wrote the algorithm that churn out all the financial ratios and measures? Pretty scary ha? 

Your interpretation is correct, of course. But that's the accounting interpretation, not the business interpretation.

I think I said in the original that such liability can now be met at cheaper rates for MMA. Lower oil/fuel costs, nervous employees wanting to impress the boss while they're trying to figure out who to cut; idle ships put to use etc. So yes, it will cost MMA to deliver on those unearned revenues and deposits, but the margin can arguably be higher.

If the costs to MMA's deliverables has gone up, then yes it'd be stuffed. But here it's gone down and in business the smaller guys and the employees get the rawer deal. The buck doesn't just stop with MMA but rolls downhill.





> The banks are forward looking as much as the market. Back in 2012-13 they were looking at earning growth and healthy cashflow. So just because they were comfortable with the debt ratio back then doesn't mean they are comfortable with the same debt ratio now. The trajectory of the debt ratio is totally opposite.




I think I've covered debt ratio and capital structure pretty well in previous post. Even said that the 2016AR will probably show greater deterioration since 2015AR only have some 7 months impact of oil crash (see chart 2). If we look at chart 3, net operating cash is very positive. So I believe management when they say they're still within the banks covenants. 






> What figure are you using for EBIT? Per management presentation, FY15 EBIT was $87m before impairment. Payment for newbuild is also NOT included in EBIT (it simply gets capitalised into PPE on the balance sheet).




I don't take any results from management report or presentation. Just entered the financial data and it's all done for me 

The figure I got is $90.98M EBIT. Close enough.




> The newly announced EBITDA for FY16 (the full year) is only $75-85m, with low visibility for the second half. This means that MRM will report an EBIT loss for FY16, which throws your EBIT coverage guideline out of the water. Let's say they hit their EBITDA target (a big IF), we are looking at a net debt / EBITDA ratio of some 3.9x for FY16. How does that compare to Graham's guideline?




Graham advised to not take any one year's figure seriously. If we use the same ratios on that EBITDA of $75-$85M, earnings for 2016 pre-impairment, again, would be around $25M. Let say that's its earnings for coming two years... that's 3.6 times earnings at $0.25 cents? We're not happy with that kind of bargain?

If we assume MRM could survive next couple of years from its operating cash flow - chances are it could; and if it it cannot and need to sell a few vessels to get by... bringing its assets and debt down to, say, entire assets/capital of $1B... then if we dream of life getting back to where earnings return 7% to then the great years of $17% on average capital.. .that's $70 to $170M per year.

So yes, risky and foggy future... but under worst case scenario, its earnings and hence value as a going concern is still decent. Under a sweet dream scenario its one year earning almost twice its current market price.

On an asset value... forget about it.




> This is a good article summarising MRM's situation in a forward looking manner, and I draw your attention to this




There's nothing new in that article. Beside committing copyright infringement and actually bootlegging it off as actual, original research when it merely is just rephrasing what MRM has released and shown in its presentations... it just says and predict nothing.

MRM had said utilities of vessels will be low, margin squeezed... heck, MRM even went further and are more pessimistic than that Morgans article.

If we want to look forward, we can't simply look to the bad and ignore the potential good. Vessels are going to be sold off.. that's what you do when you acquire a bunch of them from a competitor - you rationalise inventory and cut overheads and admin costs. Sure the market condition make the sales tougher and mean more are need to goes on auction... but that's business, you can't expect any corporation to go smoothly and never make a bad call or a badly timed decision (in hindsight).

MRM is in a tough position, it's bad, will get worst... but how bad? Going broke bad? Have all $800 million of its vessels going to the scrap heap bad?

That's where judgment and guesses comes in I supposed. Let's hope it turn out well.



> Best of luck. Looking at your analysis, I'd suggest a quick review to see if some of the figures (both historical and forward looking ones) are indeed correct and still supportive of your thesis. As I said... there is potential, and there is the danger of total loss (and there's a range of outcome in between). And I would size my investment accordingly (and certainly not involve my brother's girlfriend unless I hate her).




I didn't involve my brother's gf. It was his money, still is his since I paid the guy... they have this what's his is also hers thing going on, hahaa... didn't realised until I was called up. She's fine... I'd be nervous too if my partner just put in some savings and next week it goes halved.


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## McLovin (16 November 2015)

luutzu said:


> I know a bit about double entry accounting. Did you know... I spent an entire year re-reading the stuff then design the database architecture for data entry of these statements and wrote the algorithm that churn out all the financial ratios and measures? Pretty scary ha?
> 
> Your interpretation is correct, of course. But that's the accounting interpretation, not the business interpretation.
> 
> ...




Have their costs actually gone down or are you just speculating? I'm finding it hard to follow what you're saying. Do I understand you've reclassified a liability as an asset? If so have you removed the cash at bank asset that is the contra to the liability? If not you've really just created something out of thin air.


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## luutzu (16 November 2015)

McLovin said:


> Have their costs actually gone down or are you just speculating? I'm finding it hard to follow what you're saying. Do I understand you've reclassified a liability as an asset? If so have you removed the cash at bank asset that is the contra to the liability? If not you've really just created something out of thin air.




Speculating. There are some grounds for that though.

$44M liabilities from unearned revenue and deposits. These could very well be from the new Chevron contract they just won in June 2015 (again, speculating)... But given the nature of MRM's business - put crew on the ship, fill the tank and take it out to work... It is not unthinkable that these costs has come down from those $44 mill costs (and profit) to carry them out.

In the 2015AR, there are talk of new Enterprise Agreement in place then, and from presentation in Aug. I remember new ones are being negotiated. These will presumably reduce MRM's labour costs.

With Fuel going down, labour down, ships idling that will be use now or could be sold... Such liabilities are only technical and arguable an asset more than a liability.

But the above interpretation are *just one small bit* in my analysis above. It was a throw away. 

Putting that liability back, or leaving it as it... and I have argued that MRM's debt ratios etc. are sound.

Yes, it will get worst in FY16 when the full impact of oil crash will force the oil guys to cut back on capex etc. But will that sink MRM? I don't think it will.



----

You guys are right that yes, liability is a liability and we can't turn it into an asset and make assumptions that they are assets etc. In an accounting sense, yes we can't be that creative. In a business sense we can.

Say receivables... it's an asset but until it's paid and is in our account, it's not really an asset - it's somebody else's assets. Same with liability... more so in this case for MRM.

I run a small business and I never consider deposits or prepayment as liabilities.. it's just cash I could use first, and know I can keep whatever was my margin and use the rest to deliver the goods when they're due.

---

At the end of the day, the decision to invest in MRM or not comes down to its assets.

MRM has $790M in vessel assets - after the $100M vessel impairment charge. The entire company goes for $90 to $150M... 

Assumes the bank calls and MRM need to sell some to meet its debt covenant on the $450M LT debt... Its assets will not go down to below $200M. Its newbuild alone costs $122M; the average age of its vessels are around 3 to 5 years old... these vessels could last 20 years easy.






I could be wrong but live and learn they say


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## skc (16 November 2015)

Thanks for your detailed response and robust discussion. My apologies in advance that I will not be able to spend enough time to give you another response of great detail. It just feels to me that you have either used some wrong numbers, or perhaps just confusion over the wording of your post vs the actually analysis.

One example is EBIT number used. First you said


luutzu said:


> EBIT in 2015 includes the non-cash impairment of $120M, also include some $112M in final payments for the new build to be delivered at end of calendar 2015 and March 2016... the coverage next year, with the expected headwinds, would still be comfortable.




Then you said


luutzu said:


> The figure I got is $90.98M EBIT. Close enough.




This $90.98M figure does NOT include non-cash impairment and does NOT include payment for new builds. So what you first said is not correct.

Another example regarding pre-payment. First you said


luutzu said:


> If we look at the notes and were to redefine liabilities under Unearned revenue of $38M and deposits received $5.9M, *bringing this $44M into current assets or remove it from liability will show very healthy Solvency ratios. *




Then you said


luutzu said:


> I think I said in the original that such liability can now be met at cheaper rates for MMA. ...So yes, it will cost MMA to deliver on those unearned revenues and deposits, but the margin can arguably be higher.




It's one thing to assume that the prepaid work can be done at a higher margin (not guaranteed without knowing the contractual terms), it is completely wrong to say that you can just remove it from the liability or move it into the current asset. The balance sheet impact from slightly higher margin earned on $44m of work is much smaller.

Last example is on your earnings...


luutzu said:


> If we use the same ratios on that EBITDA of $75-$85M, *earnings for 2016 pre-impairment, again, would be around $25M.* Let say that's its earnings for coming two years... that's 3.6 times earnings at $0.25 cents? We're not happy with that kind of bargain?




Last year, depreciation was = $131m. Even if you allow for some reduction (from assets divested/impaired), it's still a much larger number than the EBITDA forecasted. There is fair chance that MRM will report an EBIT loss, and almost guaranteed to report a negative earnings for the full year pre-impairment. You can't just use the same ratio for earnings / EBITDA in previous years to project this year's figure. 

Anyhow, thanks again for the discussion. We have both presented enough for any interested observer to undertake their own further research. 

Best of luck with your position.


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## luutzu (16 November 2015)

skc said:


> Thanks for your detailed response and robust discussion. My apologies in advance that I will not be able to spend enough time to give you another response of great detail. It just feels to me that you have either used some wrong numbers, or perhaps just confusion over the wording of your post vs the actually analysis.
> 
> One example is EBIT number used. First you said
> 
> ...




Thanks skc.

English is not my native tongue, haha.

Regarding EBIT... I defined it in the system and have checked those definition so they're good. In the case of MRM they seem to include the depreciation costs in the expense item with vessels and other assets themselves; and for 2015 separate the $120 impairment - where I then define it as a one off. Though this 2016FY may prove it's a two off.

But regardless, in this instance I didn't go through and do the ongoing capex to get to adjusted earnings etc. Focus was mainly on book value. 

The situation MRM is in, any capex I could estimate will very quickly be outdated anyway. One, they're selling vessels in a climate where we don't know how many they'd be selling or need to sell; Two, dry docking x number, warm docking y number will throw any estimates of capex off.

But yea, earnings for 2016 and 2017... it'll make money from operations and will report losses from impairment. All I am betting on is I bought it at way below its book value, the stuff it has are new, and a few Asian neighbours may find they'd want some boats to help build a few island in the South China Seas lest the Chinese take all of it 

This is why i never gamble or smoke...


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## Value Collector (1 May 2016)

I think this company has a pretty solid future, and is a bargain at the moment, I have been holding since December, and not only do I think it's severely undervalued as it currently stands, but I believe the amount of contracts that will be available in the coming years will make it super profitable.

There is a bit of a game changer coming in my opinion, there is a pipeline that is going to be built that will link Apa's Northern Territory pipeline to their east coast grid via mt isa.

This is significant to MRM, because it will mean the Timor sea gas fields, which are currently practically undeveloped, but have about 3 times the amount of gas than Australia's other giant field the north west shelf, will be able to supply gas into the east coast market and to the LNG plants in Queensland.

I believe this will lead to a boom in activity in this field which Mrm can service, lots of exploration, lots of drilling, lots of pipe laying and lots of rig construction and servicing. 

With all the pressure to limit coal seem gas fracking, and a reduction in coal power plants, I think this field will be a great source of gas and Mrm will benefit greatly.

I am happy to hold at the moment.


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## Value Collector (6 May 2016)

I also forgot to mention the second LNG plant that is currently under construction in Darwin, and the assiociated  800km under sea gas pipline that has been built linking the browse basin (which MRM is also active in) to Darwin.

So in summary, we have two enormous oil and gas basins, that are very gas rich and under developed, linked to Darwin which has 1 operating LNG plant and a second under construction, and we also have a project under development that will link Darwin to the east coast cities (Brisbane, Sydney, Melbourne, Adelaide and various regional cities, mines and industries) and LNG plants in Gladstone.

looks like the future is bright for MRM's operations in the north / north west to me.


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## luutzu (6 May 2016)

Value Collector said:


> I also forgot to mention the second LNG plant that is currently under construction in Darwin, and the assiociated  800km under sea gas pipline that has been built linking the browse basin (which MRM is also active in) to Darwin.
> 
> So in summary, we have two enormous oil and gas basins, that are very gas rich and under developed, linked to Darwin which has 1 operating LNG plant and a second under construction, and we also have a project under development that will link Darwin to the east coast cities (Brisbane, Sydney, Melbourne, Adelaide and various regional cities, mines and industries) and LNG plants in Gladstone.
> 
> looks like the future is bright for MRM's operations in the north / north west to me.




Talking to yourself again VC? 

This MRM was quite an eye opener for me. That we could actually get a five to ten bagger without too  much gambling 

btw, how does the linking Darwin to the east coasts LNG plants benefit MRM?

They're mainly offshore right? Oh wait, linking it mean the need to drill offshore to supply the pipes?

---

Look into ANQ buddy. It could either go to zero or a lot a lot more.


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## Value Collector (6 May 2016)

luutzu said:


> This MRM was quite an eye opener for me. That we could actually get a five to ten bagger without too  much gambling
> 
> btw, how does the linking Darwin to the east coasts LNG plants benefit MRM?
> 
> ...




There are two really big offshore gas basins near Darwin, the browse and the Bonaparte, both are gas rich and under developed, the reason they are under developed is because they are considered remote, there is not many gas markets easily available to them.

Linking up the APA's Northern territory gas pipeline to the APA's east coast grid, opens up markets for the gas in these fields, meaning gas can be produced at a higher rate and there fore more exploration, more construction, more drilling and more general platform servicing, MRM benefits by an increase in the available contracts for all of this activity.

The link has been a approved, they went with option 1, linking the NT to the east via mt isa, and incitec have already signed up to buy gas for their fertiliser plant.

Basically the more gas they can sell, the more activity on the fields and the more projects the better MRM will do. Before their market was limited to 1 lng plant and local NT industry, now they have a second LNG plant being built and a connection to the rest of Australia, which includes other LNG plants.

The gas companies will now be able to Gladstone, Brisbane, Sydney, Melbourne, Adelaide, Tasmania and anywhere in between.  






> Talking to yourself again VC?




I have a habit of it, you never know, maybe a lurker gets value from my posts.


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## Value Collector (6 May 2016)




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## luutzu (6 May 2016)

Value Collector said:


> There are two really big offshore gas basins near Darwin, the browse and the Bonaparte, both are gas rich and under developed, the reason they are under developed is because they are considered remote, there is not many gas markets easily available to them.
> 
> Linking up the APA's Northern territory gas pipeline to the APA's east coast grid, opens up markets for the gas in these fields, meaning gas can be produced at a higher rate and there fore more exploration, more construction, more drilling and more general platform servicing, MRM benefits by an increase in the available contracts for all of this activity.
> 
> ...




That's some good thinking there. 

I noticed the new pipe linking gas to the East Coasts but didn't managed to link it to MRM. But yea, I think you're right.

Noticed also that MRM's half-yearly ( I think) report saying how the vessel sales post AR reporting actually fetched higher prices than what management had put on their book value after the $120M write-down that brought its NTA to $2.15. 

Add to that the, I think, inevitable need to restart Woodside's Browse (?) FLNG project and the Darwin works you're saying... 

If that happen, say in a couple year, oil should improve and we're back in business - able to put those Jaya ships to serious work... woah! 

But let's not ahead of ourselves and be happy with $1 a share.


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## Value Collector (6 May 2016)

luutzu said:


> But let's not ahead of ourselves and be happy with $1 a share.




I am pretty patient, I am never afraid to put my money to work for 3 years if it means a doubling or tripling of value, that's the only way I know how to play this game.

I think given time the share price will more than reflect the value of those ships and port side land, this current shortage of contracts is going to be temporary, especially because work in the fields has to be done prior to delivering gas.


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## joeno (27 June 2016)

What do you guys think about the recent plunge in MRM shares?


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## pixel (27 June 2016)

joeno said:


> What do you guys think about the recent plunge in MRM shares?








I am tempted to consider this a fairly solid support. Maybe give it a week to prove a triple bottom?


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## skc (27 June 2016)

joeno said:


> What do you guys think about the recent plunge in MRM shares?




Operationally nothing surprising... things are challenging and will remain so for some time. That has been the prevailing condition so not really unexpected.

However, the update highlighted difficulties in selling MRM's fleet to repay debt, putting pressure on the balance sheet. It mentioned that it is in discussion with lenders which is never a good thing to mention. The operational cashflow will be a key thing to watch.... namely, can they fund the operations and the financial obligations without more equity / debt? If not, perhaps there will a capital raising (forced by the banks may be) in the near future.


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## The Triangle (2 July 2016)

skc said:


> Operationally nothing surprising... things are challenging and will remain so for some time. That has been the prevailing condition so not really unexpected.
> 
> However, the update highlighted difficulties in selling MRM's fleet to repay debt, putting pressure on the balance sheet. It mentioned that it is in discussion with lenders which is never a good thing to mention. The operational cashflow will be a key thing to watch.... namely, can they fund the operations and the financial obligations without more equity / debt? If not, perhaps there will a capital raising (forced by the banks may be) in the near future.




Operating cash flow plus what they have in cash at the moment should be fine enough to keep operations funded for a a few years.  They previously flagged capex moving forward would be 'minimal' (I presume that to be less than 10 million?).  I think they will end up with minor losses due to depreciation, but manage to keep positive cash flows.  EBITDA is still reasonable (even assuming further deterioration) to cover interest and operations.

They also flagged discussions with lenders over a year ago, so it is a concern, but I think it has been well factored in to the SP.  MRM will have a solid 18 to 24 months to trade themselves out of this mess, which will be dependent on oil and offshore activity - something which they have no control over.   If conditions don't improve by late 2017/early 2018 then I think they will be in fire-sale of asset territory rather than capraising/recap territory.   Probably still easier to sell ships than shares.


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## luutzu (16 November 2017)

A cap raising to raise only some $90m with $30m to repay the lenders and $60m to buy a big middle finger to Halom. 

You want me fired did ya? Better make sure your holdings were registered in the ANZ and you have more cash on hand my Singaporean opportunist a hole. - Webb (as imagined by me)

See how the market price goes at reopen. Might pick up some more. It's only money, right?


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## luutzu (22 November 2017)

For those interested with MRM's development...

Halom sent a complaint to the Takeover Panel a day after MRM's board decided to raise new equity and (not at all) dilute Halom's current holdings.

MRM came back saying that well, since the panel haven't (had the time) to issue any decision, we've done the institutional raising so that's too late. And until there's an order, we're going ahead with the retail offer, so suck on that.

Here's my theory... Halom is going to wait until the cash from the raising settles into MRM's account, then it'll make a takeover offer for the whole company at, say 30 cents a share. pump it up a bit more to ease shareholders pain.

Hopefully the M.E shareholders currently at 5% would want to counter offer, maybe they'll just work with Halom and divvy up... In the end, Mr Kum will get to kick Weber in the azz for trying to be smart and make a fool out of his Halom.

The games and ego of the big boys ey.


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## Trav. (30 November 2018)

Monthly competition stock pick

I have had this one on my radar for a while and noticed a huge volume spike on the 26/11. MACD appears to be turning the corner so currently trading around 17c and has plenty of upside circa 30c

@tech/a thanks for your post last night and I will will comment there later but looking at this chart below it appears to be be another example of what you were trying to point out. I have read about VSA a couple of times but I am a little slow on the uptake there so maybe with a few good live examples it will help to bash the knowledge into this old head.


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## tech/a (30 November 2018)

Trav

So I went over and checked news on the Share.
Looking for a reason for the volume spike.
There has been a new substantial share holder
come into play.
So Id have this on watch. With no other news
the new holder must have some confidence in
growth from somewhere. If something pops up
we will see it in price. Until then I personally would
just watch it from the side.

*I don't concern myself with oscillators--they are simply a 
consequence of price action not a leader to it.*


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## luutzu (30 November 2018)

tech/a said:


> Trav
> 
> So I went over and checked news on the Share.
> Looking for a reason for the volume spike.
> ...




I think there's two new substantial shareholders. 

Two directors' related trusts are buying. Though not much really. 

Things might be looking up for this one over next year or two. If it doesn't, MRM might go down the tube... and if it does, I think the entire offshore logistics/OSV industry might disappear too. 

I mean, MRM is one of the few in its industry that managed to barely scrape through the current/recent downturn. With oilers breaking even at about $30/bbl, them being in profit past couple years better translate into feeding their contractors else they all go under.


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## Ann (1 December 2018)

luutzu said:


> For those interested with MRM's development...
> 
> Halom sent a complaint to the Takeover Panel a day after MRM's board decided to raise new equity and (not at all) dilute Halom's current holdings.
> 
> ...




...another scenario could be the big buy in could be to have the $$ to keep selling it down to a below bargain basement price and just scoop it up. No idea, just a concussed brain musing!  
The chart looks weak, stuck under the 100% fibonacci line with only 0.13c support coming from back June the 25th 2003 which was when it was just coming out of its churning stage. (churning is when stocks aren't actually trading they sort of just stay alive by small sales and buys sometimes daily sometimes less. A churned stock has a different look to a traded stock. I will show you all one day. Probably sooner rather than later if I have time and feel up to it).


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## luutzu (1 December 2018)

Ann said:


> ...another scenario could be the big buy in could be to have the $$ to keep selling it down to a below bargain basement price and just scoop it up. No idea, just a concussed brain musing!
> The chart looks weak, stuck under the 100% fibonacci line with only 0.13c support coming from back June the 25th 2003 which was when it was just coming out of its churning stage. (churning is when stocks aren't actually trading they sort of just stay alive by small sales and buys sometimes daily sometimes less. A churned stock has a different look to a traded stock. I will show you all one day. Probably sooner rather than later if I have time and feel up to it).
> 
> View attachment 90577




MRM escaped an attempted takeover from Halom. I think its second or third largest shareholder's CEO is the current Chairman. So there's definitely value there. 

They've scraped through their credit crunch, the bankers are somewhat understanding... with offshore projects expected to rise, being one of the few established and experienced operator still standing might do them well in the upturn.


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## Ann (4 December 2018)

Ann said:


> ...another scenario could be the big buy in could be to have the $$ to keep selling it down to a below bargain basement price and just scoop it up. No idea, just a concussed brain musing!
> The chart looks weak, stuck under the 100% fibonacci line with only 0.13c support coming from back June the 25th 2003 which was when it was just coming out of its churning stage. (churning is when stocks aren't actually trading they sort of just stay alive by small sales and buys sometimes daily sometimes less. A churned stock has a different look to a traded stock. I will show you all one day. Probably sooner rather than later if I have time and feel up to it).




You know, if what I have imagines turns out to be true and it does disappear like a Mermaid underwater, it could kill a lot of sailors who are onboard, so to speak! I have no idea if it is, it is just me looking at it thinking there may be something to look at here. Maybe by the Federal Police, don't know who, if it does shuffle off this mortal coil. I am thinking if people look at this and see a 'real business' that can be understood as Buffet describes and suggests stay in it for life, there will be a lot of people who will buy into this and stay there. I bought into this when it was doing a long sideways consolidation, then it got dumped fast. It fell below my exit line so I buggered off. Didn't get too badly hurt, made me remember it though.

So what I am seeing in my vivid and concussed imagination is a company with a great product, assured of success raises heaps of money by public company, buys all it needs and then slowly sells the company down to nothing, gets taken over by a private concern and steps back on shore with a big smile while all the sailors have dived over board to join the Mermaid.

What I thought I would do was to add the names of the directors and their purchases .....just for the record......in case they disappear. 
*DATE* *DIRECTOR* *NUMBER* *PRICE* *AMOUNT*
05/12/2014 Mark Bradley 250,000 $1.320 $330,000
19/11/2014 Eve Howell 40,000 $1.680 $67,200
19/11/2014 Mark Bradley 250,000 $1.660 $415,000
18/11/2014 Tony Howarth 100,000 $1.653 $165,270
29/09/2014 Mark Bradley 250,000 $1.980 $495,000 
Those were all purchases, no sales.

*Directors & Executives (current) **
*NAME* *TITLE* *DATE OF APPT*
Tony Howarth Non Exec Chairman 05/07/2001
Jeffrey Webber Managing Director 31/12/2002
Peter Raynor CFO 13/06/2005
Eve Howell Non Exec Director 27/02/2012
 Mark Bradley Non Exec Director 22/09/2000
Andrew Edwards  Non Exec Director 01/12/2009
Chiang Gnee Non Exec Director 05/07/2012
*Positions may have changed

These are the past directors in case these names require any scrutiny.
*Directors & Executives (former)*
*NAME* *TITLE* *DATE OF APPOINTMENT* *DATE OF RESIGNATION*
James Carver Executive Director 29/06/1998 15/07/2013
Jeffrey Mews Non Exec Director 12/08/1998 24/11/2009
Alan Birchmore Chairman 12/08/1998 14/02/2007
Peter Ming Non Exec Director 27/11/2002 24/11/2005
Chan Teun Alternate Director 27/11/2002 24/11/2005
Richard Reid Non Exec Director 22/09/2000 17/11/2004
Christopher Sutherland Non Exec Director 19/11/2003 04/03/2004
Derrice-Ann Dillon Executive Director 01/01/2001

I am not for a moment suggesting these people have done anything wrong. It is just when companies go ta-tas there is no record for us mere mortals to refer to. The brokers have a big book, which name escapes me for the moment, with all sorts of links and information which makes for fascinating reading. I spent hours reading it, OMG the information in it was simply amazing. It used to be in the reference section in the library but then it all went digitalized and none of this information is available for the mug punter like you and me now. In fact being digitalized I guess with every update all the past 'sins' are wiped out. But what is seen, can't be unseen!


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## luutzu (4 December 2018)

Ann said:


> You know, if what I have imagines turns out to be true and it does disappear like a Mermaid underwater, it could kill a lot of sailors who are onboard, so to speak! I have no idea if it is, it is just me looking at it thinking there may be something to look at here. Maybe by the Federal Police, don't know who, if it does shuffle off this mortal coil. I am thinking if people look at this and see a 'real business' that can be understood as Buffet describes and suggests stay in it for life, there will be a lot of people who will buy into this and stay there. I bought into this when it was doing a long sideways consolidation, then it got dumped fast. It fell below my exit line so I buggered off. Didn't get too badly hurt, made me remember it though.
> 
> So what I am seeing in my vivid and concussed imagination is a company with a great product, assured of success raises heaps of money by public company, buys all it needs and then slowly sells the company down to nothing, gets taken over by a private concern and steps back on shore with a big smile while all the sailors have dived over board to join the Mermaid.
> 
> ...




I hope you're wrong but yea... 

The board and management did buy at the height of the oil boom. Not sure if the boom/bust is always in hindsight, but I guess the Singaporean running Halom know when to sell and when to reload. 

But to their credit, they managed to escaped the takeover and screw Halom at the same time. So that was quite impressive.


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## Ann (4 December 2018)

luutzu said:


> But to their credit, they managed to escaped the takeover and screw Halom at the same time. So that was quite impressive



....or looking at it the other way luu, he might have been assisting them to get the price down a bit and shake a few sailors overboard, without that dramatic dump I might still own it....who knows? Let me tell you, a bad case of concussion does wierd things to the brain. One is not allowed to think (critically as in learn something) so all sorts of thoughts do free-float.


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## luutzu (4 December 2018)

Ann said:


> ....or looking at it the other way luu, he might have been assisting them to get the price down a bit and shake a few sailors overboard, without that dramatic dump I might still own it....who knows? Let me tell you, a bad case of concussion does wierd things to the brain. One is not allowed to think (critically as in learn something) so all sorts of thoughts do free-float.




Yea, a fair few would have been burnt in the downturn. I was luckier in that I got in at 40c. Managed to average down to about 21c now... Cigar butt smoking can be bad for you 

My thinking (prayers?) is that it'll come back up with a vengeance... soon... enough... any year now.


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## Ann (4 December 2018)

luutzu said:


> Yea, a fair few would have been burnt in the downturn. I was luckier in that I got in at 40c. Managed to average down to about 21c now... Cigar butt smoking can be bad for you
> 
> My thinking (prayers?) is that it'll come back up with a vengeance... soon... enough... any year now.



I really hope so luu, I think the market needs quality business which are in for the long haul. I first bought it because it had a DRP (Dividend Re-Investment Plan), it actually had tangible assets and a real business going on and I had had every intention of staying in for the long haul and just let the DRP do its thing over the years. (Yeah OK, I always do a bit of fundamentals if I am actually going to buy into a stock, it isn't all TA with me). If our markets keep getting trashed by junk, pump and dumps that get  promoted on forums like this, then the mumsandads will give up on investing in the markets, buy into an index fund and maybe lose all their money if it goes belly up.  I shall be watching this one with interest and really hope the directors are in there doing battle against the bad guys. Time will tell.


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## Ann (25 May 2019)

I decided to put this into the June Comp, on reflection I have no idea why when I really look at this stock. I think I just like its little boats....call it a boat bias! 

MRM has been bobbing along in the shallows since the end of 2015 and I have had it on my watch list after I sold it waaay back. I had a fibbo line drawn on a longer term basis but when I opened it up for the long term view today there must have been a stock adjustment so the fibbo was completely off its line, so fibbo gone.

Looking at the 12 month chart I can see a falling overhead resistance line coming from early 2016, there is an overhead horizontal resistance line at .225c coming from March 2017 and a shorter term horizontal overhead resistance at .19c coming from November 2018. The Twiggs Weekly Money Flow is showing a slight rise but is still traveling in minus levels. The Twiggs Daily Money Flow looks a bit more optimistic as it hits the 0% line. It is currently sitting above the 21dsma and 50dsma but the 200dsma is bearing down on it creating yet another overhead resistance.

One positive aspect is the double rounded bottom, these can be quite bullish but it needs to get above the overheads. I think this stock is destined for mediocrity as my entry in the June Comp!
12 month chart...





And a view of the five year chart. Not a very pretty sight.


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## peter2 (28 May 2019)

@Ann.  I think you noticed the "boats" rising with the tide. IMO your bias is for rising markets and that's what caught your eye on MRM. 

There's no doubt that MRM was thumped by the falling oil prices and the poor trading conditions for oil related services that followed. The company was caught out and had to sell most of their assets (ships). 

Price has been rolling along the bottom of the charts since late 2015. It's only recently that there's signs of rising prices.  After such a large fall in price there's going to be lots of overhead resistance. Are these old levels going to be relevant? How many long term investors are likely to be still holding. Share price dropped from 3.75 to 0.13. Who's going to be still hanging on?  

This company had to start again. New bankers, new investors, new business goals, new hopes. I'd treat this chart as new and delete those longer term lines. A pure spec opportunity. Damn, that I can't use it for the June comp. The ASX 40P portfolio does have a position in MRM.


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## Ann (29 May 2019)

peter2 said:


> I think you noticed the "boats" rising with the tide. IMO your bias is for rising markets and that's what caught your eye on MRM.




This is very true Peter! Although I have had MRM on watch for years and what caught my eye was the double rounded bottom. (No boy jokes please fellas!)



peter2 said:


> After such a large fall in price there's going to be lots of overhead resistance. Are these old levels going to be relevant?




In my experience the older the resistance/support line, the stronger it seems to get particularly a falling overhead resistance line.



peter2 said:


> This company had to start again. New bankers, new investors, new business goals, new hopes. I'd treat this chart as new and delete those longer term lines.




I am very respectful of _all _long term lines. I got taken out by a long term overhead falling resistance line in 2015 (AMP) which began in 2001. I should have known better, I had the line drawn and knew it was dangerous, but I foolishly thought it would be different this time and had told myself a story. I got what I deserved, a solid slap. The price tried to get above that same falling line in March 2018, failed and fell like a stone below its long term support coming from 2003.



peter2 said:


> Damn, that I can't use it for the June comp.




Sorry Peter, I am happy to offer it to you for July if you still want it.

This is the chart I am looking at. I am not concerned about any overheads from 2013 when it was in the mid $3 range, they are for a higher level much further along. Currently the resistance from those days sits at $2.30, so well out of the picture at this stage.

I am interested in the red falling overhead resistance line coming from May 2016. It is not a very old falling resistance but it is certainly something which would give me pause. Yesterday it overcome the 200dsma which is very heartening. It may float right on through it but I would certainly have my lifebuoy ready in case it hits the rocks!


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## Ann (1 June 2019)

As I mentioned in previous posts I have this in for the June Competition. I entered on the 24th May, so no going back. On the 27th of May there was a huge volume spike. Checking the Twiggs Money Flow, it was going out. 

So with a long term falling overhead, TMF leaving the building now, unlike when I entered when it was rising, I think my chances are getting slimmer by the day. It has also made a couple of weak attempts at the falling overhead and failed so far. This appears to be a dead certainty for mediocrity now. But nil desperandum.


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## Ann (10 June 2019)

Just thought I would look in on my June Comp pick, how's it doing?  PFFFT nuthin' so far! And the darn thing has fallen under the 19c resistance line. The weekly Twiggs Money flow is going bye-bye! At least it is still sitting above the 21dsma.
Just follow my comp picks if you want a good stock to short folks! 

(Note to self: Look at the bloody long term chart before you put something up in a comp, geez!)


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## willoneau (26 July 2019)

Quick note , purchased MRM today at 0.225


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## willoneau (26 July 2019)

MRM came up on my system as a buy signal yesterday, as it was a large range bar with extreme volume I was concerned. After following tech/a and his style i watch for this occurring, after analyzing past trades i have noticed that at times i get in at the top only to see the price pull back to my stop. One way i have found to help with this is to place a conditional order to buy above the high of the bar or recent high if close instead of the open, time will tell if this helps. there were 4 trades i didn't enter because of it but unable to locate charts as they were discarded when stop hit.


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## charlsie (3 January 2021)

this is my 3rd pick for the 2021 full year comp. After reorganising themselves last year, i hope things can settle and they can get back to work and put some runs on the board. i'm really hoping the share price stays above 0.030c and all will be good. my perennial dog unfortunately


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## The Triangle (20 February 2021)

charlsie said:


> this is my 3rd pick for the 2021 full year comp. After reorganising themselves last year, i hope things can settle and they can get back to work and put some runs on the board. i'm really hoping the share price stays above 0.030c and all will be good. my perennial dog unfortunately



Correct MRM is the wettest manky dog of the litter.    Years ago I had a fair amount of confidence in the company to get through the downturn but I was completely wrong.  They've had to sell off good assets and dilute shareholders to virtually nothing to survive.  However - after the recent capital raising, and 1:10 consolidation and capital raising they are looking interesting.  The old board and executive team is nearly completely gone now.  

Net debt sits around 85 million, 
Net assets around 300 million
Market cap of 106 million.    
Forecast EBITDA 30 to 35 million (as of this month)
The losses are mind-blowing - $1/share last year (consolidated)  $0.40 the year before.  But cash flow has been positive in each of those years leading to debt repayments of 13 million dollars.   MRM has done so horribly since 2014/5 - its difficult to trust them and the market they are in is difficult to predict.  If things go well by years end net debt could be another 5-15 million lower.    Interest payments were 15+ million alone last year!    

 The SP is below the recent cap raising price and should vessel utilisation go up (I doubt it will as the world has a lot of stock of vessels doing nothing) and the offshore market kicks up again - MRM could go up very big very quickly.    They are certainly on my watch list, but still very risky.   If the SP drops to the mid-low 20s I would probably buy.  However having Ian Macliver on the board would probably prevent me from investing in MRM (As I am a disgruntled former holder of WSA)


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## Country Lad (12 March 2022)

Been a while since this little pup showed any real spark.  I have it as a breakout again on 4 of the 5 indicators.


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## Miner (12 March 2022)

willoneau said:


> Quick note , purchased MRM today at 0.225



You would be laughing now with MRM at 50 +


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## The Triangle (13 March 2022)

Miner said:


> You would be laughing now with MRM at 50 +



Was it pre-consolidation?  Probably equates to purchasing at $2.25 now.

The balance sheet has not improved in the past year.   Very average results but surely a capital raising is coming shortly for MRM on the SP swing upwards in the past month or so?   Should be easy enough to milk some 708s and regular moms and dads for $20 million or so off the back of skyrocketing oil prices.

Have not paid much attention to the vessel day rates lately, but I don't think they've gone up that much.  Still think there is some potential here with MRM even if its just liquidating the company assets and returning capital.


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## Country Lad (25 August 2022)




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## debtfree (3 January 2023)

I have selected MRM for the 2023 CY Tipping Comp.

I noticed MRM in peter2's thread and thought it looked good in the monthly chart. Rising Prices, rising Volume, expanding BB, rising MA, what's not to like chart wise at this moment. I only need it to continue for a year.


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