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MISC's two LNG carrier charter contracts to contribute up to RM40 mln in profit from 2026 onwards -- RHB Research

03/10/2022 10:56 AM

KUALA LUMPUR, OCT 3 (Bernama) -- MISC Bhd's two liquefied natural gas (LNG) carrier charter contracts are expected to contribute between RM35 million to RM40 million in net profit from 2026 onwards, said RHB Research. 

Previously, MISC announced that its subsidiaries, Polaris LNG Three Pte Ltd and Polaris LNG Four Pte Ltd, had secured long-term time charter contracts with SeaRiver Maritime LLC, a wholly-owned subsidiary of ExxonMobil, for two more LNG carriers.

The charters are expected to commence in 2026.

RHB Research said it is positive about the contract wins, as it will expand MISC’s current LNG fleet size of 30 vessels, and boost recurring income in the long term. 

"Note that MISC had secured two 15-year charter contracts from Exxon Mobil, fetching an estimated combined contract value of US$711 million, back in 2019. These vessels are currently under construction in South Korea, and are slated for delivery in the first quarter of 2023 (1Q23).

"While there is limited disclosure on the contract details, we estimate the daily charter rate to range from US$80,000 to US$90,000 per day, which is lower than the average three-year charter of US$111,750 per day in August. 

"Such rates are also higher than Exxon Mobil’s implied charter rate of US$65,000 per day, as the cost of building a new vessel had escalated by over 30 per cent to as high as US$240 million in August," it said in a research note.

RHB Research has maintained its "buy" call on MISC with a target price of RM7.79. 

At 10.25 am,  the counter fell six sen to RM6.70, with 131,700 shares traded.


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