KUALA LUMPUR, Nov 14 — MIDF Research has maintained a “neutral” call on MISC Bhd, with growth to be driven by the liquefied natural gas (LNG) segment, supported by new liquefaction projects and reduced reliance on coal in China and Korea.
The research house said it would provide growth for the remaining months and later on spill over to the financial year 2020 (FY20).
“We are maintaining our neutral stance on MISC. The only major catalyst for the company is the potential job wins for the offshore segment in the FY20 worth close to US$6 billion, which includes floating production storage and offloading (FPSO) Mero 3 and FPSO Limbayong,” it said in a note.
The research house said it would provide growth for the remaining months and later on spill over to FY20.
As for the petroleum tanker business, the decision to remain with delaying retrofitting of scrubbers and demolishing activities to capitalise on the temporary surge in spot rates will eventually exert downward pressure on tanker rates until year-end, it said.
The research house said that even if demolition levels were to increase following the International Maritime Organisation (IMO 2020), positive impacts of lower number of tankers to freight rates would partially offset the extension of the Organisation of the Petroleum Exporting Countries cuts and lower expected oil demand growth.
MIDF set a target price of RM8.35 per share for MISC, derived by pegging the FY20 book value per share to a 1.05x price-to-book value, which is +1.5 standard deviation above its five-year average, reflecting a slew of contract awards for the LNG segment as of late in addition to the large job bids which MISC has entered into.
At 4pm, shares of MISC fell six sen to RM8.24 with 2.49 million shares transacted. — Bernama
