Malaysia's MISC still 'underperform' on petroleum tanker segment downturn - RHB |
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Tue, 20 Nov 2007 04:03
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KUALA LUMPUR (Thomson Financial) - RHB Research said Tuesday it is affirming its 'underperform' rating on MISC Bhd, with a fair value of 8.11 ringgit per share, as the energy shipping company's petroleum tanker segment is likely to remain in a cyclical downturn over the next 12-18 months.The world petroleum tanker fleet is expected to expand at an annual rate of 5-6 percent in 2007-2008, far outstripping the 1 percent projected growth rate in tanker demand, RHB said in a note, citing global shipping experts Drewry Shipping Consultants.The gap is only projected to close when the supply growth rate slows to 3 percent as projected for 2009, and growth in demand picks up to 2 percent, it said.MISC is highly vulnerable to the cyclical downturn of the petroleum tanker segment because more than half of its total petroleum tanker capacity is based on spot rates, RHB Joshua Ng said.The petroleum tanker segment is the second largest contributor to MISC's earnings, after liquified natural gas (LNG), contributing about 40 percent of its total pretax profit, while LNG contributes 53 percent, Ng said.On Monday, Malaysia's state-owned oil company Petroliam Nasional Bhd (Petronas) said its unit Malaysia LNG Sdn Bhd will supply up to 920,000 metric tons of LNG per year to the Osaka Gas Co Ltd.The LNG will be transported by MISC from the Petronas LNG complex in Bintulu in the east Malaysian state of Sarawak to Osaka Gas' receiving terminals in Senboku and Himeji in Japan.The contract is for 15 years beginning April 2009.The latest development augurs well for MISC, but 'we are keeping our forecasts for MISC as we have already assumed in our models that the Petronas LNG complex runs at full capacity,' Ng said.At 10.52 am, MISC was down 10 sen or 1 percent at 9.65 ringgit.(1 US dollar = 3.38 ringgit)munfoo.hong@thomson.com-mfh/ntCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Malaysia's Petronas unit to supply LNG to Japan Osaka Gas 