BWN Valuation Analysis

I’ve been digging into Bhagwan Marine’s H1 2025 results and thought I’d share my valuation work for discussion. Always keen to hear where others think I might be wrong.

Current Position:

• Share Price: $0.585

• Market Cap: $161m

• H1 Revenue: $154m

• H1 EBITDA: $26.6m

• Operating Cash Flow: $21m

• NTA per share: $0.52

Valuation Approach 1: Asset base floor

Current price is 112% of NTA. Even at a conservative 80% of NTA for liquidation scenario, you get AU$0.42 downside protection from the vessel fleet.

Valuation Approach 2: Earnings Power (Margin-sensitive scenarios)

I’ve played with some different margins on the H1 annualised revenue base ($308m):

Bear Case (15% margin)

• EBITDA: $46m
• NPAT: $15m
• EPS: 5.5c
• At 12× P/E - $0.66
• At 15× P/E - $0.83

Base Case (18% margin)

• EBITDA: $55m
• NPAT: $18m
• EPS: 6.6c
• At 12× P/E - $0.79
• At 15× P/E - $0.99

Bull Case (20% margin)

• EBITDA: $62m
• NPAT: $21m
• EPS: 7.6c
• At 12× P/E - $0.91
• At 15× P/E - $1.14

Valuation Approach 3: Free Cash Flow DCF

This one’s based on actual H1 cash flows - $21m operating minus $17.7m capex. Projecting forward with conservative 1-2% revenue growth but margin expansion to 20% EBITDA:

• Bear case (12% WACC): $0.94

• Base case (10% WACC): $1.24

Valuation Approach 4: Peer Comparison

Using MMA Offshore (ASX: MRM):

• EV/EBITDA: ~16.7x
• P/E: 9.8× trailing and around 9.75x  

Implication for BWN:

• At BWN’s bear-case NPAT ($15 m) and assuming similar P/E - fair value $0.55–0.65.
• At base-case NPAT ($18 m) - fair value $0.70–0.90.
• If BWN achieved MMA’s EV/EBITDA multiple on similar EBITDA ($55–60m annualised), implied EV could be $900m+, suggesting value above $1/share.

Fair value range seems to be $0.80-1.20 across methods. Even the conservative scenario suggests decent upside from current levels.

Is the 26% CAGR earnings profile realistic given project lags and competition, or is it more appropriate to model a steadier 10–15% CAGR with higher reinvestment needs, which would still support $0.80–1.00/share fair value?

Risks:

Marine services can be cyclical, the margin expansion story needs to actually happen, and fleet replacement will eventually require significant capex. Small cap liquidity is always a consideration too.

Another question is whether the decommissioning tailwind is as sustainable as management claims it will be.