MISC up by 6.22% on broader market, ringgit rally

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KUALA LUMPUR (July 1): Shares of MISC Bhd rose as much as 60 sen or 7.77% earlier today following the upward revision of outlook for Malaysia’s credit rating to ‘stable’ from ‘negative’, which saw the broader market and the ringgit rallying in the morning trade.

The rise in MISC’s (fundamental: 1.2; valuation: 0.8) counter also came following an upgraded rating by AffinHwang Capital Research to ‘hold’ at a target price of RM7.60.

“Fundamentally, MISC is still backed by its liquefied natural gas (LNG) business, with all of their LNG tankers secured on a long-term charter,” Affin Hwang had said in a note to clients yesterday.

As at 2.19pm, the stock eased to RM8.20, up 48 sen or 6.22%, after some 3.18 million shares changed hands. Earlier this year, the stock had peaked at RM9.37 on April 29.

The current price gives it a market capitalisation of RM37 billion.

AmResearch Sdn Bhd also upped its position to ‘hold’ and set the company’s fair value at RM8.30 per share based on its sum-of-parts valuation. It also projected that the company would return to black if the rates remain in MISC’s strong petroleum segment.

“The management expects the rates to continue holding up throughout the year, with fourth quarter being seasonally the strongest, as demand for the petroleum tankers are expected to grow by 3%–4% on the back of a continued production by the OPEC, while supply is only expected to grow marginally at 0.4%,” AmResearch said.

However, AffinHwang cautioned that earnings from the LNG segment may be impacted as three vessels are off charter for refurbishment this year, which normally takes between three to five months.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)