Analysts expected MISC’s outlook to remain steady, with near-term earnings unchanged but longer-term optionality building.
PETALING JAYA: MISC Bhd
has received a letter of award from PETRONAS LNG Ltd (PLL) for the long-term time charters of newbuild liquefied natural gas carriers (LNGCs) to PLL.
In a filing with Bursa Malaysia, the energy-related maritime solutions and services firm said it has also entered into shipbuilding contracts with Hudong-Zhonghua Shipbuilding (Group) Co Ltd for the construction of three newbuild LNGC for the project.
“The project will be for a firm charter period of 20 years for each LNGC, with commencement expected in 2029. MISC will provide the LNG shipping services through its wholly owned subsidiaries.”
MISC said the project represented a strategic initiative to capitalise on PETRONAS’ anticipated LNG production growth, while supporting MISC’s LNGC rejuvenation programme through the introduction of modern, efficient vessels aimed at reducing greenhouse gas emissions and overall emission intensity.
Analysts expected MISC’s outlook to remain steady, with near-term earnings unchanged but longer-term optionality building.
TA Research and MBSB Research concurred that MISC’s strategic entry into carbon capture and storage (CCS) shipping was positive, keeping the stock’s near-term outlook largely anchored by its existing diversified portfolio.
“We view this strategy positively, marking MISC’s first commercial entry into CCS shipping and LCO2 transportation, a niche segment with high barriers to entry and long-term structural growth potential,” TA Research said.
The research house highlighted that the 10-year time charter secured via a 50:50 joint venture with Kawasaki Kisen Kaisha provides utility-like, long-term contracted cash flows with limited exposure to spot market volatility, underpinned by blue-chip counterparties (Equinor, TotalEnergies and Shell via Northern Lights).
In addition, the contract strengthened MISC’s positioning as a transition-enabling maritime solutions provider, potentially opening doors to future CCS-related shipping tenders in Europe and Asia, TA Research pointed out.
That said, there are broader industry concerns that regulatory and policy frameworks need to catch up with commercial CCS shipping projects like the one MISC just secured, underscoring that market growth may hinge as much on rules as on contracts.
“Without regulatory clarity on CO2 as a tradable cargo, LCO2 ships remain a harder sell internally, even as interest in CCS builds,” an industry expert told StarBiz.
Meanwhile, TA Research did not expect this contract alone to materially move near-term earnings, given vessel deliveries only from financial year 2029 onwards.
As a result, it made no change to its earnings forecasts and downgraded the stock to “hold” due to “the limited upside to our valuation,” despite pegging a target price of RM8.40.
MBSB Research struck a similar tone, framing the CCS entry as aligned with MISC’s transition strategy.
“This move aligns with MISC’s long-term strategy to expand its portfolio into low-carbon and transition-enabling maritime solutions,” it said.
“The contract provides MISC with some exposure to the growing CCS industry, which is expected to benefit from increasing regulatory pressure and a stronger push by corporates towards environmental, social and governance-aligned operations.
“Over the longer term, we view this as earnings-enhancing for the group, as CCS-related shipping demand is likely to expand alongside global decarbonisation efforts,” it added.
