MISC expects stronger performance in 2019 and 2020


Answering questions: Yee and MISC chairman Datuk Ab. Halim Mohyiddin speaking to reporters after the company’s AGM.

KUALA LUMPUR: After a tough 2018, MISC BHD is looking at a stronger performance this year and in 2020, as its past projects begin contributing to its bottomline, and anticipated better market conditions.

President and CEO Yee Yang Chien told a press conference that the company is expecting a “big jump” in 2020 as five shuttle tankers are commissioned and will begin contributing to its revenue.

“We are hoping for at least a 20% jump in our net operating cashflow in 2020, compared to 2018,” he said.

The reason the company is measuring its performance based on cashflow, he said, was due to the changes in accounting standards.

He noted that the group’s profits over the coming years would be very “lumpy”, largely due to these new accounting standards.

“If we build an asset, and it is chartered out to the client for 15 years, the current accounting convention requires us to recognise the value of the entire 15 years, in the year when the asset comes into service.

“In the past, we only recognised what we earned during each year,” he said.

Yee, who was speaking to reporters after the group’s AGM yesterday, noted that MISC had four major businesses which are LNG shipping, petroleum shipping, the FPSO business and its 66.5%-owned fabrication provider Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE).

For the LNG shipping business, he said, the market had been grappling with an oversupply situation which has continued into 2019.

At the end of 2018, the spot market had spiked, but it has since gone down again.

“The spot market will continue to be weak, as there is still an excess of vessels.

“Also, a lot of older vessels, which were on long-term charters, are expiring and coming back into the market in 2019,” he said.

However, for the longer-term market, Yee said there were many new LNG projects coming in, which would provide support to long-term charter rates.

MISC, however, will be unaffected by any swing in the market - good or bad - as 27 of its 29 LNG ships are locked up in long-term charters.

As for the petroleum segment, Yee said the concern was about global production numbers, as production cuts meant there would be less oil to be transported by ships.

“If the oil price holds up and producers start producing a bit more, that will be positive for this segment,” he said.

However, Yee said he believes that the industry had “turned the corner” after a tough 2018.

“We think it can only get better from here in terms of charter rates,” he said.

On potential new contracts, Yee said the total value of the projects the group had bid for in 2018 was about US$6bil, for which it saw a success rate of about 20%, compared to a success rate of 14% the previous year.

During the first quarter of this year alone, he said, the total value of projects the group was bidding for was US$6bil – equivalent to that of the entire 2018.

“We are not short of opportunities – we are just being careful about picking the right ones as each project involves heavy investment,” he said.


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