KUALA LUMPUR: Affin Hwang Research has maintained its Hold call on MISC with a target price of RM7.40, it said in a note on Tuesday.
The research house said the downtrend in LNG rates suggests a less attractive rate for MISC’s upcoming expiring LNG vessels.
"On the petroleum segment, we continue to expect rates to improve, but chemical tanker rates are expected to remain subdue. All in, we remain neutral on MISC as we believe most of the positives have been reflected in its share price," it said.
It added that MISC share price up 30% year-to-date, in line with its positive stance, MISC’s share price has risen by a laudable 29% backed by improving quarterly earnings as well as its on-going initiatives to divest its non-core business.
This year, MISC has disposed its entire equity interest in MISC Integrated Logistics for RM250mil in Mar14 and earlier this month MISC sold its 15.7% stake in NCB Holdings for RM222mil to MMC Holdings.
"These moves help strengthen MISC’s financial position to focus on its core business in energy and petroleum related shipping. LNG rates on the downtrend In 2015, there will be another two Liquefied Natural Gas (LNG) carriers expiring.
"We gather MISC is still negotiating for new contracts for its expiring vessels. Over the past one year, the LNG time charter rate (up to 3 years) has fallen by 28% yoy to an average of US$57,500/day currently.
"Given the current oversupply and scheduled delivery over the next few years, we expect rates to continue to be on the downtrend," it said.
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