PETRONAS JOB SET TO ADD UP TO RM120 MLN TO MISC'S CORE NET PROFIT - CIMB SECURITIES

KUALA LUMPUR, Oct 2 (Bernama) -- CIMB Securities Sdn Bhd expects the latest MISC Bhd’s liquefied natural gas (LNG) carriers construction contracts from Petronas to contribute RM47 million - RM120 million to its core net profit from the financial year 2027 (FY2027).

The brokerage firm also projects annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of RM265 million from the same period.

In a research note today, CIMB Securities highlighted that MISC’s strong balance sheet, with a low net gearing ratio of 0.2x, ensures that financing for the construction of the two new LNG carriers is not expected to pose any issues.

On Monday, MISC announced it had signed a letter of intent with Petronas LNG Sdn Bhd for long- term contracts involving two newly built LNG carriers, set to last for 15 years, starting in 2027.

However, specific details such as contract value, capacity, and the exact start date were not disclosed.

“We are maintaining our earnings forecasts, discounted cash flow-based target price of RM10.25 per share, and ‘buy’ rating, pending further updates from the management,” CIMB Securities said.

In a related development, MISC also reached an agreement with Petronas for the early termination of time charters for three existing steam-powered LNG carriers: Seri Ayu, Seri Angkasa, and Seri Begawan (Seri AAB).

These vessels will be redelivered on their 20th anniversary in 2027/2028, with MISC receiving compensation for early termination.

MISC also secured extensions for two existing LNG carriers, Seri Alam and Seri Amanah (Seri AA), which will continue to operate until March 31, 2028, after their current contracts expire in 2025 and 2026.

“The rationale behind the early termination of the Seri AAB time charters remains unclear. However, MISC noted that the newbuild LNG carriers align with its strategy to rejuvenate its fleet with modern and efficient vessels to reduce greenhouse gas emissions and intensity by 2030,” it said.

With the latest contract, MISC now has 19 LNG carriers under construction, further strengthening its shipping portfolio.

Four vessels are scheduled for delivery in 2025, 13 in 2026, and the remaining two by 2027. Notably, 11 of these LNG carriers are chartered to Qatar Energy.

“We project that the potential daily charter rate for these contracts will be in the range of US$110,000-US$120,000 (US$1=RM4.1595) per day, considering the vessel capacity of 174,000 cubic metres, similar to the other newbuilds and its long-term nature,” CIMB Securities stated.

At 12.30 pm, MISC’s counter eased four sen to RM7.89 with 1.11 million shares traded.

-- BERNAMA