Maintain BUY, TP: RM9.75. MISC Berhad (MISC)'s 1QFY24 core earnings came in within our yearly earnings estimates at 55% and consensus' at 54%. As such, we maintain a BUY call with the target price of RM9.75.
1HFY24 normalised earnings up +36%yoy. MISC's 1HFY24 normalised earnings gained +54.5%yoy to RM1.3b. Meanwhile, 1HFY24 revenue added +5.1%yoy to RM7.0b.
Gas Assets & Solutions. 1HFY24 revenue slipped -4.2%yoy to RM1.5b and operating income dropped -24%yoy to RM361.1m. The lower revenue was due to lower earning days from contract expiries and lower charter rates in the current quarter. Meanwhile, the lower income was due to lower revenue and higher vessel operating costs.
In the LNG shipping market, spot rates remained subdued in 2QCY23, driven by: (i) heatwaves in Asia that uplifted LNG demand, (ii) increased competition for Europe-bound cargoes for inventory restocking, and (iii) the restart of key LNG terminals post-maintenance. We expect the LNG market to remain sanguine in the near-term, following seasonal demand and winter restocking, in line with the expected onset of La Nina coming into CY25.
Petroleum & Product Shipping. 1HFY24 revenue added +9.9%yoy to RM2.7b, and operating income added +24.2%yoy to RM792.3m. The higher performance of this segment was due higher freight rates and earning days achieved.
Mid-sized tankers remained resilient while VLCC rates had softened amid weaker imports from China in 2QCY24. However, the overall tanker market remains positive with increasing long-haul exports from the US, Brazil and Guyana, as well as low fleet growth. We expect that the long- term charter and elevated rates will continue to benefit this segment moving forward.
Offshore Business. 1HFY24 revenue slipped -8.4%yoy to RM963.1m, while operating income fell -45.9%yoy. The lower performance for this segment was due to lower recognition of revenue from the conversion of a Floating, Production, Storage and Offloading unit (FPSO) following lower project progress, as well as adjustment on cost provisions relating to an asset.
Source: MIDF Research - 26 Aug 2024
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MISCCreated by sectoranalyst | Nov 21, 2024
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