Kenanga Research said the new contract win will enable MISC to replace earnings lost from its older LNG vessels.
PETALING JAYA: MISC Bhd
’s latest 20-year firm charter contract win for three newbuild liquified natural gas (LNG) carriers for PETRONAS LNG Ltd is strategically positive for the group’s long-term earnings, analysts say.
In a note to clients, Kenanga Research said the new contract win will enable MISC to replace earnings lost from its older LNG vessels.
This also demonstrates the PETRONAS group’s commitment to renewing its LNG fleet and its intention to continue growing its LNG export business.
“However, we also note that the new LNG carriers will not be as lucrative as its older fleet, such as the Puteri-class vessels, because LNG capital expenditure (capex) costs have risen over the years.
“This is while rates remain moderate at around US$90,000 per day, which is significantly lower compared with the 2022 peak of US$200,000 per day,” the research house noted.
While the details of the ordered carrier are scant, Kenanga Research assumed a capex of US$250mil per vessel, consistent with the 2025 average newbuild price for a 174,000 cu m-capacity LNG vessel in MISC’s January 2026 outlook.
Assuming a project internal rate of return of 7%, based on a daily charter rate (DCR) of US$90,000 per day – close to the DCR implied in MISC’s industry newsletter – a weighted average cost of capital of 6.1%, and a 75% debt funding structure, the research house arrived at a discounted cash flow value of RM227mil, translating into RM0.05 per share accretion to its sum-of-parts valuation.
Hence, the project’s yearly pre-tax profit contribution could amount to about RM83mil, representing 4% of financial year 2026 (FY26) pre-tax profit.
Kenanga Research maintained its earnings forecasts with an “outperform” call on MISC, raising its target price (TP) to RM8.70 from RM8.65 previously.
It likes MISC for its recent fleet expansion and modernisation, decent dividend yield supported by recurring cash flow and the strength of its balance sheet, and the long-term growth trend in the LNG business driven by structurally rising demand.
Meanwhile, BIMB Securities Research said the new contract represents a material step in MISC’s fleet renewal and strategic capacity expansion.
This fleet renewal is also timely, given the current softness in LNG segment performance, it noted.
As at the third quarter of 2025, only 19 out of 26 LNG carriers were operating, with seven vessels laid up, resulting in gas segment quarterly revenue declining to a multi-year low of US$123mil.
Looking ahead, BIMB Research noted that eight more LNG carriers are due for time charter expiry between 2026 and 2028.
The research house kept its “buy” call on the stock with an unchanged TP of RM9.80.
It favours MISC as one of the beneficiaries of robust floating production, storage and offloading demand, recurring income from its asset-leasing business model, and a decent dividend yield of around 4% to 5%.
TA Research, in a report, said the latest contract win reinforces MISC’s position as PETRONAS’ core LNG shipping partner while supporting its ongoing fleet rejuvenation strategy.
While earnings contribution is long-dated, the brokerage said the contract enhances long-term earnings visibility, limits exposure to spot market volatility, and carries minimal counterparty risk given the PETRONAS linkage.
“That said, we do not expect a material near-term earnings impact, as vessel deliveries and charter commencement are only expected from FY29 onwards.”
TA Research has a “hold” call on MISC with an unchanged TP at RM8.40 per share.
In the third quarter ended Sept 30, 2025, MISC posted a net profit of RM541.8mil, compared to RM338.9mil a year earlier.
Earnings per share rose to 12.1 sen from 7.6 sen previously.
The group reported lower quarterly revenue of RM2.8bil compared to RM2.96bil in the comparative quarter.
During the nine-month period to Sept 30, 2025 (9M25), MISC recorded a net profit of RM1.71bil against RM1.64bil in 9M24, while revenue dropped to RM8.33bil from RM9.93bil.
