MISC Bhd’s liquified natural gas (LNG) pre-tax profit is likely to recover from this year onwards due to progressive newbuilding deliveries.
CGS International Securities Malaysia Sdn Bhd said weak LNG tanker spot rates that are below cash operating costs of US$20 per day have prevented MISC from deploying its LNG vessels profitably outside of its long-term charters.
This means that MISC’s LNG ships that have come off long-term charters and those vessels that are not otherwise locked into long-term charters are currently being left idle.
“As a result, MISC’s LNG pretax profits declined substantially between 2022 and 2024 and we expect another year of decline in 2025,” it said in a note.
According to MISC, eight LNG vessel long-term charters are expected to expire in the next three years, which the firm said are likely to be the Aman Sendai, Puteri Zamrud, Seri Alam, Seri Amanah, Seri Angkasa, Seri Ayu, Seri Begawan, and Seri Bijaksana.
“We have factored these expiries into our forecasts, but we believe that MISC’s LNG pretax profits should be able to grow from 2026 onwards due to progressive newbuilding deliveries. MISC has an LNG order book,” it added.
The order book includes charter contracts for QatarEnergy and Petronas LNG.
In addition to the above LNG ships, MISC’s gas segment also has six existing VLEC vessels currently contributing to its earnings.
Additionally, MISC achieved first oil for its US$2 billion floating production, storage and offloading (FPSO) Mero-3 project in Brazil in October 2024. Since then, it has bid for several contracts and scored some wins in the FPSO Kelidang and FSO PNG LNG charters.
“We expect these new offshore assets to contribute to MISC’s EPCIC revenues and profits from 2026F onwards, even though the actual charter commencement is in the 2028-2029 timeframe,” it said.
The firm reiterated its “Add” call on the stock with a higher target price of RM8.98 after taking into account the new contract wins.
Source: The Straits Times
