This article first appeared in The Edge Financial Daily on August 15, 2019

KUALA LUMPUR: MISC Bhd’s net profit for the second quarter ended June 30, 2019 (2QFY19) rose 24.5% to RM399.8 million from RM321.2 million a year earlier, on the back of higher revenue.

In a filing with the stock exchange yesterday, MISC said its 2QFY19 revenue rose 0.9% to RM2.16 billion from RM2.14 billion previously, mainly from higher number of operating vessels.

Quarterly earnings per share rose to nine sen from 7.2 sen previously. MISC declared an interim dividend of seven sen per share, payable on Sept 18.

For the six months ended June 30, MISC’s net profit surged 44% to RM910.3 million from RM631.8 million in the same period last year, while revenue climbed 6.7% to RM4.44 billion from RM4.16 billion.

MISC said petroleum tankers’ earnings were considerably better in the first half of the year (1H19) than in the previous year due to market rebalancing after a high level of scrapping in 2018, supported by long-haul crude trade growth.

However, going forward, it said continued Opec-led oil production cuts, geopolitical risk in Iran and the recent tanker attacks in the Straits of Hormuz may affect shipping volumes in the shorter term.

Nonetheless, 2H19 is expected to pick up for the tanker market as ship supply will be crimped by vessels taken out of service for scrubber retrofitting, and tanker markets would be boosted by increasing US oil exports and increase in tonne-mile demand.

However, overall outlook for the heavy engineering segment remains uncertain amid prolonged trade and geopolitical tensions, as well as slowing economic growth. Prospects for the offshore segment, meanwhile, continues to be positive, supported by healthy activities in oil and gas exploration and production.

Outlook for its marine business also continues to improve, supported by higher volume for upgrading and retrofitting work due to the implementation of International Maritime Organzation 2020 sulphur cap regulation.

Additionally, it said the recent contract award from Petronas Carigali Sdn Bhd for the Kasawari Gas Development project demonstrates the segment’s commitment to ensure the sustainability of its order book.

“As the industry outlook continues to be challenging in the current financial year, the heavy engineering segment remains cautious and will focus on replenishing order book in various geographical areas as well as diversifying into other businesses,” it said.

MISC shares rose five sen or 0.69% to RM7.25 yesterday with a market capitalisation of RM32.36 billion.