MISC shares continue rally on positive future outlook
MISC Bhd’s share price rally continues today, gaining 2.0 per cent so far this week, backed by its positive future outlook.
At 11.30am today, the share price rose 1.4 per cent or nine sen to RM6.61, with 928,000 units were traded.
AmBank Research has maintained its “buy” call on MISC with an unchanged sum-of-parts- based fair value of RM7.75 per share.
MISC chief executive officer Datuk Yee Yang Chien, during an engagement session, said the company is eyeing fresh contracts, which include floating production storage and offloading (FPSO) projects that could cost US$1-US$2 billion and liquefied natural gas (LNG) carriers as rates have risen 62 per cent year-on-year (y-o-y) to US$128,000 per day.
This year, MISC was relatively subdued in bidding for new contracts as the group was focusing on the execution of its existing projects amid COVID-19.
“FPSO tenders currently appear to be single-bidder propositions, given the limited number of financially viable operators.
“Upstream reported that MISC is among interested bidders for Petróleo Brasileiro S.A (Petrobras) P-81 FPSO to be contracted under a build-operate-transfer model at the Sergipe-Alagoas basin offshore Brazil,” it said in a note.
The group is also eyeing prospective contracts requiring LNG vessels with dual-fuel capabilities, including a target to replace 50 per cent of its fleet of 30 carriers by 2030.
“While these dual-fuel vessels could cost an additional US$10-US$15 million each, the management views that European charterers are willing to accept the higher charter rates, given rising emissions restrictions,” AmBank Research said.
Going forward, the research house expects modest improvement to petroleum tanker rates as the Organisation of the Petroleum Exporting Countries and allies plan to raise production levels by two million barrels from August to December 2021 amid the winter season, which is usually the peak tanker cycle.
Together with the delivery of six dynamic positioning shuttle tankers and two very large crude carriers next year, this is expected to support financial year 2022 earnings growth prospects,” it noted.