PETALING JAYA: The 20-year floating storage and regasification unit (FSRU) contract MISC Bhd
has secured from Petronas Gas Bhd (PetGas) marks a strategic entry into the floating re-gas infra segment and could open the doors to future opportunities in markets across Asia in the long term.
AmInvestment Bank (AmInvest) stated that the FSRU contract is a step-up for MISC, which already has an operating track record with floating storage unit and liquefied natural gas (LNG) shipping.
“A successful delivery would improve MISC’s credibility to pursue future FSRU opportunities in Asia, where demand for LNG is rising with 235 million tonnes per annum (mtpa) of new global LNG liquefaction capacity expected to come online by 2030.
“Assuming a 10% to 20% of incremental LNG demand is met via FSRU, this requires five-to-16 additional FSRUs (each FSRU can handle three to five mtpa), versus a current newbuild order book of only three-to-four units, pointing to tight supply,” it stated in a recent report on MISC.
AmInvest, however, stated the PetGas contract’s immediate valuation uplift on MISC is modest at 10 sen per share, taking its target price (TP) on the counter to RM9.50 a share.
It maintained its “buy” call on the stock.
The FSRU unit will be utilised to support PetGas’ third regasification terminal in Lumut, Perak. It will likely have a storage capacity of 170,000 cubic m and a regasification send-out capacity of 500 million standard cubic ft per day and cost around RM1.3bil to build.
Hong Leong Investment Bank (HLIB) Research estimates the FSRU to be value-accretive and generate a daily charter rate of US$120,000 per day and a pre-tax profit margin of 20%.
“Assuming a debt-to-equity ratio of 80:20, a capital expenditure of RM1.3bil over financial year 2026 (FY26) to FY27, and a weighted average cost of capital of 8.4%, we derive an internal rate of return of 9.4%.
“We estimate the project to contribute around RM8.8mil in pre-tax profit per annum from FY29 onwards,” it forecast.
HLIB Research also maintained its “buy” recommendation on MISC with a higher TP of RM9.11 a share (from RM9), adding that the stock’s risk and reward profile remains favourable in anticipation of earnings growth, driven by MISC’s offshore and petroleum segments.
AmInvest added that MISC offers a clean large-cap way to buy into the aftermath of the Iran war.
Its share price downside is anchored by a 5% dividend yield and 7% to 9% free cash flow yield, while its petroleum shipping arm, AET, provides upside to tanker tightness as Hormuz-related disruption keeps effective vessel supply tight and supports Atlantic Basin tonne-mile demand.
