PETALING JAYA: MISC Bhd
, dragged by impairments on its vessels, warns that additional impairments may be necessary moving forward, says CIMB Research.
According to MISC, this is possible in the event there are eight more vessel rolloff contracts without re-employment causing the number of idle units to hit 15.
MISC disclosed cumulative liquefied natural gas (LNG) carrier market value erosion of about 30% year-to-date.
“These impairments reflect both lower expected future cash flows and a tougher resale scrap or charter market for older assets.
“The company guided that market conditions remain challenging. Currently, MISC has seven LNG carriers laid-up as steam turbine vessels continue to lose competitiveness against modern tonnage,” the research house said.
To counter the structural downturn, MISC is accelerating its fleet renewal plans, aiming for 20 modern LNG carriers by 2028, while exploring conversions of older units into floating storage assets and selectively scrapping uneconomical ships.
CIMB Research and TA Research said MISC’s gas segment would remain its toughest challenge heading into 2026 with a widening divide between the resilience of its petroleum and offshore businesses and the mounting pressure within its gas segment.
The research houses expected the gas division to stay weak, with CIMB Research cautioning that the LNG division is likely to remain under pressure from vessel oversupply and elevated newbuild deliveries, which continue to suppress freight rates.
TA Research shared the same view, noting that LNG chartering conditions are likely to remain soft through 2025, weighed by vessel oversupply, newbuild deliveries and muted demand, which will keep steam LNG carrier rates under pressure.
“Its petroleum segment continues to provide a steady earnings base, benefiting from higher earnings days and robust long-term charter rates,” it added.
CIMB Research attributed the resilience to sustained tonne-mile demand amid geopolitical tensions and shifting trade routes, which helped boost the segment’s operating profit by 16.2% quarter-on-quarter.
TA Research expected the strength to continue as crude tanker rates are expected to stay firm through 2025, underpinned by stronger vessel demand from increased Organisation of the Petroleum Exporting Countries and allies output and steady tonne-mile growth along US-Asia routes.
The offshore division, meanwhile, delivered another strong quarter, supported by floating production, storage and offloading (FPSO) contributions from projects such as Mero 3 and the consolidation of the Kikeh FPSO.
Although operating profit eased from the previous quarter due to the absence of Brazilian Petroleum Corp standby rates, analysts see solid momentum building in the medium term.
TA Research noted that offshore activity is set to strengthen from 2026 onwards, with global offshore capital expenditure projected to climb steadily towards US$211bil by 2029.
Both research houses maintained “positive” calls on the stock.
CIMB Research reiterated its RM9.19 target price, noting that MISC trades at a discount to historical valuations.
TA Research maintained its RM8.40 target price, supported by a view that the petroleum, offshore and heavy engineering segments will continue to provide earnings stability.
