LNG shipping leads MISC to be Malaysia’s top stock

  • Business
  • Friday, 06 Dec 2019

Bullish outlook: An MISC LNG carrier. MISC expects to win as much as 30% of the deals it pitches for in 2020,

KUALA LUMPUR: Malaysian energy shipper MISC BHD will bid for US$6bil of contracts next year, as surging demand for transportation of liquefied natural gas helped it beat all other stocks in the country’s benchmark index.

MISC expects to win as much as 30% of the deals it pitches for in 2020, president and group chief executive officer Yee Yang Chien said in an interview in Kuala Lumpur.

This year, it signed agreements to supply LNG vessels to Exxon Mobil Corp and Mitsubishi Corp, after the world’s biggest LNG exporter Qatar Petroleum set off a “stampede” by announcing plans to order as many as 100 new carriers, he said.

“Because this is a huge order and it will take up a lot of capacity of shipyards, there is a fear or concern that ship prices will move up very aggressively on the back of the indicated demand, ” he said at his office on Tuesday.

That demand has helped MISC to gain 21% this year, a stark contrast to the benchmark FTSE Bursa Malaysia KLCI Index’s 8% slump, the worst performance among major Asian markets.

AmInvestment Bank Bhd in September upgraded the country’s oil and gas stocks to reflect brighter prospects as rising asset utilization drives charter rates higher.

“In the past, MISC was regarded as just a dividend stock with no new growth, ” said Kong Ho Meng, an analyst at UOB Kay Hian Securities who holds a buy rating on the stock.

“Right now MISC is being viewed as a growth stock because it is ready to capture big new earnings and growth projects.

“MISC will bid for carriage contracts including floating production storage, offloading vessels and LNG tankers in 2020, ” Yee said.

The company generates as much as $1.2 billion cash each year, which will increase over the next four to five years, according to Yee.

Half of that can be spent on investments after payouts to shareholders, with the focus remaining on prudent cash flow management.

MISC could benefit from Malaysian state oil company Petroliam Nasional Bhd’s need for mid-sized LNG carriers, UOB’s Kong said.

Petronas is its biggest shareholder with a 62.7% stake, according to data compiled by Bloomberg. — Bloomberg

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