This article first appeared in The Edge Financial Daily, on November 5, 2015.

KUALA LUMPUR: MISC Bhd, a 62.67%-owned subsidiary of Petroliam Nasional Bhd (Petronas), saw its net profit rise 2.7% to RM483.56 million or 10.8 sen per share for the third quarter ended Sept 30, 2015 (3QFY15) from RM470.8 million or 10.5 sen per share a year ago, mainly from higher revenue in its petroleum business and improved charter rates in the chemical business.

“However, [the] liquefied natural gas (LNG) business recorded lower operating profit from lower revenue (in 3QFY15), while additional provision for costs to complete an ongoing project caused a decline in heavy engineering operating profit,” MISC (valuation: 0.8; fundamental: 1.2) said in a statement yesterday.

“This was achieved in spite of taking impairment provision of RM232.3 million in the current quarter,” it added.

Revenue for 3QFY15 jumped 14.9% to RM2.51 billion from RM2.18 billion in 3QFY14, mainly due to improved freight rates in the petroleum business.

The 3QFY15 revenue gains were, however, offset by a smaller fleet of operating vessels in the chemical business, lower earning days in the LNG business, and different phases of project construction in heavy engineering.

For the nine-month period (9MFY15), MISC’s net profit climbed 37.7% to RM1.72 billion or 38.4 sen per share from RM1.25 billion or 27.9 sen per share a year ago, while revenue grew 8.4% to RM7.6 billion from RM7.01 billion.

MISC said its cash and cash equivalents rose to RM5.1 billion as at Sept 30, 2015 from RM4.8 billion as at Dec 31, 2014. On prospects, MISC said operationally, the group is expected to sustain its financial performance for 9MFY15 into the final quarter of FY15.

“The petroleum shipping segment continues to enjoy the benefits of market strength in the first half of 2015 into the third quarter of the year, despite the quarter being a seasonally weaker period.

“This segment is likely to end the year on an equally strong note given the start of the winter season in the northern hemisphere which is seasonally positive for this segment,” it said.

The group also sees the steady performance of its LNG shipping and offshore business segments of the past nine months will continue into 4QFY15 on the back of the portfolio of long-term contracts both business segments have in place.

“However, the outlook for and prospects of the upstream oil and gas industry are projected to remain poor with the prolonged weakness in [the] oil price,” said MISC.

It noted that the cutback in exploration and production activities will continue to weigh heavily on the offshore construction activities for the heavy engineering segment. 

“On a positive note, the segment’s marine repair business is expected to perform steadily for the rest of the financial year and to a limited extent, cushion the weak performance of [the] offshore construction business,” added MISC.