MISC shares rise 5.4% on transfer of LNG vessel ownership from Petronas

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KUALA LUMPUR (Feb 24): MISC Bhd’s shares rose as much as 5.4% in the morning session on news that the shipping firm is acquiring five liquefied natural gas (LNG) newbuilds worth US$1.1 billion for parent Petroliam Nasional Bhd (Petronas).

The vessels will then be chartered out to Petronas LNG Sdn Bhd for 15 years, with an option for extension for another five years.

In addition, Petronas has also agreed to extend the charter of five LNG Puteri class ships for another 10 years.

MISC's (fundamental: 2; valuation 1) counter rose 41 sen to reach a high of RM8.05, before easing to end the morning session up 4.84% or 37 sen, with 2.63 million shares changing hands.

AllianceDBS Research said the renewed relationship with Petronas would help to restore investors’ confidence on MISC’s LNG earnings prospects.

It is raising its earnings estimates for MISC for financial years 2015 and 2016 by about 16% each to reflect the revised foreign exchange assumption of USD/RM of 3.41 for FY15/16 (previously USD/RM 3.13/3.08), and other housekeeping adjustments.

"We have not included the five newbuild LNG vessels and time-charter extension in our forecasts, pending further details on the charter contracts," AllianceDBS Research said in a note to clients today.

The research firm has a "buy" call on MISC, with a revised RM9.30 target price from RM8.05 previously.

(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.)