20250529 MISC Berhad

Results deemed within; D/G to HOLD @ MYR8.26 TP Despite a good start, we deem MISC’s 1Q25 results to be in line including the recognition of a one-off gain for FPSO Bunga Kertas. While we make no changes to our FY25-27E forecasts, our SOP-based TP is lowered to MYR8.26 (from MYR8.34) to account for weak guidance on continued delays in LNG liquefaction projects and oversupply of LNG vessels in the near term. Our terminal growth (TG) rate is trimmed to 0.2% (from 0.3%) for its LNG business. Our SOP-TP also pencils in a lower consensus TP of its 66.5%-owned ММНЕ (ММНЕ МK, Not Rated). With limited upside, we D/G MISC to HOLD (from BUY). 

1Q25 core net profit +45% QoQ, +8% YoY MISC’s 1Q25 core net profit of MYR755m (+45% QoQ, +8% YoY) was boosted by a one-off gain in relation to the commencement of a new lease contract for FPSO Bunga Kertas in the Gulf of Thailand – amounting to c.USD17m. In view of a normalisation of profits in upcoming quarters, we deem MISC’s results to be within expectations – at 31%/33% of ours/consensus full-year FY25E estimates. A DPS of 8 sen in 1Q25 is also in line with past practices. 

LNG shipping spot rates to remain soft in FY25E  We expect market LNG shipping spot rates to remain soft in FY25E due to: i) influx of high number of new vessels coming online (adding to global supply); and ii) a delay in upcoming additional liquefaction capacities, likely related to geopolitical risks. We note that 8 of MISC’s LNG vessels will expire in 2025E, but will be replaced by 4 newbuilds for Qatar Energy throughout the year. MISC will also have 11 vessels coming online in FY26E, which we have penciled into our forecasts. 

Relatively defensive, yield to provide support Despite limited upside post our lower TP revision, in our view, MISC still has a relatively defensive profile given its long-term LNG, petroleum tankers and FPSO/FSO assets which provide recurring stable earnings and cash flows, allowing a consistent dividend payout. Our DPS estimate of 36sen (FY25-27E) offers a stable yield of close to 5%, which we believe should support share price. We believe that there may be upside to our DPS forecast as Mero 3 has started recognising bareboat charter rates beginning 30 Oct 2024. 







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