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RHB Research: MISC's prospect remains solid with continuing growth in global oil demand

19/08/2022 12:22 PM

KUALA LUMPUR, Aug 19 (Bernama) -- MISC Bhd’s prospect is expected to remain solid as the near-term outlook of the petroleum tanker market would be positive, with continuing growth in global oil demand and supply, said RHB Investment Bank Bhd.

In a note today, RHB said following the delivery of two dynamic positioning shuttle tankers (DPST) in the second quarter of 2022 (Q2 2022), there will be one more DPST to be handed over in the second half of 2022 (2H 2022), followed by two liquefied natural gas (LNG) carriers and one very large crude carrier (VLCC) in 1H 2023.

“There are also two, two and then three LNG long-term contracts due in 2022, 2023 and 2024. Its current bid book is worth around US$2-3 billion (US$1=RM4.47), on which the company sees better opportunities in securing new gas-related contracts,” RHB said.

It said MISC’s 1H 2022 results are within expectations, after factoring in one-off items such as the Mero 3 cost provision and the impairment of its LNG vessels.

“We believe the company has provided sufficient cost provisions on the Mero 3 project, and headline profit should normalise in 2H 2022 -- with potentially more LNG contract wins ahead.

“As such, its recent share price weakness has led to attractive entry levels, backed by an attractive dividend yield of five per cent,” RHB said.

Yesterday, the international energy-related maritime solutions and services provider announced its Q2 2022 results, wherein it recorded a net loss of RM19.10 million compared with a net profit of RM538.80 million in the same period last year.

MISC said the net loss was mainly due to the impairment of ships, higher finance costs from borrowings, and a lower share of profit from joint ventures in the current quarter.

Meanwhile, RHB has upgraded its ‘Neutral’ call to a ‘Buy’ call for the stock with a target price of RM7.79 per share.


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