KUALA LUMPUR: AmInvestment Bank Research has maintained its “buy” call on MISC Bhd
with an unchanged sum-of-parts-based truthful worth of RM7.75 per share.
The analysis home stated the goal value mirrored a premium of three% from its 4-star ESG score. It additionally implies an FY22F EV/EBITDA of 8x, 1 commonplace deviation beneath its 3-year common of 9x.
AmInvestment stated its forecasts had been unchanged following an engagement session with MISC president/group CEO Datuk Yee Yang Chien yesterday.
“Management is cautiously optimistic on petroleum tanker rates, which have doubled YoY to US$11,000 per day for Suezmax and risen 76% year-on-year (YoY) to US$8,800 per day for Aframax. However, very large crude carriers’ (VLCC) rates remained depressed, halving YoY at only US$6,700 per day,” it stated.
The analysis home stated as 2021 would signify the worst-case state of affairs through which adverse VLCC charges emerged in June–July this 12 months, MISC expects some restoration in FY22F as OPEC+ is prone to elevate manufacturing quotas in tandem with rising world consumption.
“Together with the addition of shuttle tankers (1 in 4QFY21 and 5 in FY22F), we expect breakeven in 4QFY21 from a 3QFY21 loss of RM8mil,” it added.
AmInvestment stated MISC was comparatively subdued in bidding for brand spanking new contracts this 12 months because the group centered on the execution of its current tasks amid the Covid-19 pandemic’s unsure influence.
However, the corporate is now eyeing contemporary contracts which embody floating manufacturing storage and offloading (FPSO) tasks that might price US$1–2bil and liquefied pure fuel carriers as charges have risen 62% YoY to US$128,000 per day.
“In line with Petronas’ ESG objectives, MISC aims to achieve net zero carbon neutrality by 2050. Hence, the group is eyeing prospective contracts requiring LNG vessels with dual-fuel capabilities, including a target to replace 50% of its fleet of 30 carriers by 2030,” it stated.
While these dual-fuel vessels might price an extra US$10–US$15mil every, MISC’s administration views that European charterers are keen to just accept the upper constitution charges given rising emissions restrictions.
“Additionally, management is jointly developing an ammonia-fuelled tanker together with Samsung Heavy Industries, Lloyd’s Register and Germany-based MAN Energy. In our view, these initiatives reaffirm our 4-star ESG rating for MISC,” it stated.
“Management expects a similar capex trend over the next 4–5 years as the 2017–2020 period which could mean US$1bil–US$1.5bil annually, depending on the type of vessels and their construction cycles.
“Hence, pending the announcement of new contracts, we maintain our FY22F–FY23F capex assumptions of US$1bil annually,” AmInvestment stated.
Going ahead, it expects modest enchancment to petroleum tanker charges as OPEC+ plans to lift manufacturing ranges by two million barrels from August to December 2021 amid the winter season, which is often the height tanker cycle.
“Together with the delivery of six dynamic positioning shuttle tankers and 2 VLCCs next year, this is expected to support FY22F earnings growth prospects,” it stated.
