KUALA LUMPUR (Sept 5): MISC Bhd's share price spiked as much as 23 sen or 3.21% to RM7.39 in morning trades, amid higher crude oil prices and after analysts upgraded the stock on higher earnings expectations.
At 11:46am, MISC shares were traded at RM7.33 with 1.43 million units transacted. AmInvestment Bank Bhd analyst Alex Goh wrote in a note today that AmInvestment upgraded its recommendation on MISC to Buy from Hold, with a higher fair value at RM8.70 from RM6.65 previously, due to their higher earnings expectations and the removal of a 20% holding company discount to AmInvestment higher sum-of-parts valuation for MISC, given its significantly improving job prospects.
"Our FY20F–FY21F earnings have been raised by 4%–14% on an increased number of shuttle tankers which will be operating in Brazil — an incremental 2 in 4QFY19 and 5 in FY20F. Recall that in May last year, MISC secured 10 year-charters for 4 specialist DP2 Suezmax-size shuttle tankers from Petróleo Brasileiro S.A.(Petrobras).
"Management has indicated that prospects over the past 2 months have substantively improved from the project scarcities experienced during 1HFY19. Hence, MISC expects an active bidding market to materialise in all its key segments, offshore floaters, LNG and shuttle tankers," said Goh.
Analysts said today that MISC had recently organised a meeting with them to update the investment fraternity on the company's outlook.
Dow Jones Newswires, quoting TA Securities Holdings Bhd, reported today that the meeting with MISC's CEO did not change TA' bearish stance on the Malaysian energy-shipping firm.
It was reported that TA said MISC is upbeat its current tender prospects will help it hit its 2019 target of US$1 billion (about RM4.19 billion) in fresh investment capital expenditure and is confident of winning contracts in Petrobras' massive oil and gas services project in December.
"Nevertheless, TA prefers to stay on the sidelines until MISC actually secures a major project to catalyze earnings growth. TA maintains its sell rating on MISC, with an unchanged target price of RM6.30," Dow Jones Newswires reported.