MISC jumps as LNG shipping rates near Nov 2018 record high

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KUALA LUMPUR (Oct 23): MISC Bhd's share price rose as much as 23 sen or 3% to RM8.48 in morning trade today in an apparent response to rising liquefied natural gas (LNG) shipping rates and after AllianceDBS Research Sdn Bhd upgraded MISC share target price (TP) to RM7.85 from RM7 previously.

AllianceDBS analyst Siti Ruzanna Mohd Faruk wrote in a note today that the shipping company's recent LNG contract wins are encouraging signs and constructive for earnings.

"We maintain our HOLD call with a SOP (sum-of-parts)-based RM7.85 TP. While VLCC (very large crude carrier) tankers are enjoying better rates, this is more than offset by lower Aframax and Suezmax rates.

"Slower global economic growth could dampen shipping demand," Siti Ruzanna said.

At Bursa Malaysia today, MISC shares were traded at RM8.38 with 1.21 million shares transacted.

LNG spot shipping rates have risen to record-high levels of US$190,000 per day seen in November 2018. FreightWaves Inc quoting Deutsche Bank transportation analyst Amit Mehrotra as saying LNG spot shipping rates have now moved higher for six straight weeks, with the magnitude of weekly gains increasing.

"Rates are currently above mid-October 2018, just before the market surged to record-high levels of US$190,000 per day last November.

"The LNG shipping market is 'catching fire'," he said.