MISC Bhd (+ve)
MISC (Fundamental: 1.2/3, Valuation: 0.8/3) first triggered our momentum alert yesterday, rising 2.3% in active trading to close at RM8.40.
Last month, MISC announced that it entered into a sale and purchase agreement to dispose its 50% stake in VTTI B.V. (VTTI), an energy storage provider with oil product storage terminals in 11 countries, for US$830 million.
In 2010, the final cost of investment in VTTI was US$882 million. Based on its carrying value as at end-June 2015, MISC is expected to realise a disposal gain of approximately USD9.1 million. The proceeds would be used to partially repay borrowings, fund capital expenditure and for future acquisitions or investments.
62.7%-owned by Petroliam Nasional Bhd (Petronas), the international shipping and maritime conglomerates has a fleet of 27 LNG carriers, 81 petroleum tankers, 14 chemical tankers and 14 offshore floating facilities.
In 2014, energy related shipping (LNG, petroleum and chemical) segment accounted for about 68% of its total revenue while other energy businesses (offshore, heavy engineering and tank terminal, including VTTI) segment contributed approximately 28%.
MISC also provides integrated logistics (haulage, trucking and warehousing, marine education and training) under the non-shipping segment, which brought in 4% of its revenue in 2014.
For 1H2015, net profit expanded some 59% on higher revenue from petroleum and offshore businesses coupled with lower operating costs from a smaller fleet of operating vessels in the chemical business.
Revenue grew 5.4% to RM5.1 billion, boosted by improved freight rates in the petroleum business, revenue recognised from an EPC (engineering, procurement and construction) project, and finance lease income contribution of a FPSO (floating, production, storage and offloading) unit.
Notably, the company has pared its borrowings from a net gearing of 48.3% at end-2011 to a healthy 14.1% at end-June 2015.
The stock trades at a trailing 12-month P/E of 16.6 times and 1.2 times book.
This article first appeared in digitaledge Daily, on September 10, 2015.