PETALING JAYA: The proposed joint acquisition to take Yinson Holdings Bhd
private will require an outlay of RM2.85bil for MISC Bhd’s 41.5% stake and would immediately elevate its financial year 2026 (FY26) net gearing from 0.19 times to 0.27 times.
CIMB Securities Research noted that even without the proposed deal, MISC’s own US$4bil to US$5bil capital expenditure programme for fleet rejuvenation and offshore projects through FY30 would lead its net gearing to climb to 0.28 times by FY29 and exceed 0.3 times by FY30.
Under the Yinson privatisation proposal, MISC and Yinson Legacy Sdn Bhd (YLSB) would acquire the remaining 55.2% stake in the floating production storage and offloading (FPSO) vessel owner at an indicative offer price of RM2.35 per share, and result in MISC holding a 41.5% interest alongside YLSB’s 41.5% and the Employees Provident Fund’s 17%.
CIMB Research pointed out that merging Yinson’s offshore execution capabilities with MISC’s robust funding capacity and Petroliam Nasional Bhd linkages holds strong strategic merit, though it introduces financial leverage risks.
Furthermore, should MISC choose to fully refinance Yinson’s RM4bil high-cost financing facility, its net gearing could reach 0.29 to 0.39 times while meaningful cash returns may take time to materialise.
The research house forecast an annual dividend distribution of five sen per share from Yinson would yield only RM60mil (a 2.1% cash-on-cash return) for MISC’s stake, which is insufficient to offset MISC’s elevated debt burden.
“Pending further details, we see the investment case hinging on whether future cash distributions and financing synergies can justify MISC’s higher leverage,” the research house stated.
According to details surrounding Yinson’s capital structure, the company issued US$1bil in redeemable convertible preference shares (RCPS) through Yinson Production to fund FPSO growth ahead of a planned June 2030 initial public offering (IPO). These RCPS impose a heavy borrowing cost of 12.95% to 13.5% per annum, CIMB Research stated.
Replacing this expensive structure through MISC’s lower cost of debt could generate annual interest savings of RM200mil (at an 8% financing cost) to RM320mil (at a 5% financing cost) for Yinson.
Additionally, refinancing eliminates potential equity dilution at the target IPO date, where unredeemed RCPS conversion would otherwise reduce Yinson’s ownership in Yinson Production from 100% to between 65% and 72%.
In the meantime, MISC looks set to benefit financially from higher tanker charter rates for the second half of FY26 (2H26), CIMB Research added.
Tanker rates have surged between 40% to 80% year-to-date (y-t-d) due to the Middle East conflict. The research house expects that to translate into higher 2H26 earnings, particularly in the final quarter (4Q26) given the lag between securing higher-rate fixtures and recognising voyage earnings.
BIMB Securities Research is also bullish on the company, on grounds that stronger tanker rates provide another meaningful earnings boost to MISC’s petroleum segment in 2H26.
“We estimate MISC achieved a blended tanker rate of around US$100,000 a day in 2Q26, contributing to a 74% year-on-year increase in petroleum revenue to RM2.24bil and more than doubling segment profit to RM858mil.
“While MISC’s realised rates will not fully track spot rates – given that only approximately 20% of its tanker exposure is linked to the spot market – we believe the continued strength in tanker rates should sustain its 2Q26 profit level through 2H26,” the research house stated.
Despite the leverage considerations surrounding the deal, CIMB Research maintained a “buy” recommendation on MISC, raising its sum-of-parts based target price (TP) to RM9.55 a share from RM9.37 previously.
The upgraded valuation reflects 2% to 15% upward revisions in its FY26 to FY28 net profit forecasts for the firm, driven by surging spot tanker rates.
BIMB Research also maintained a “buy” on MISC with a higher TP of RM10.10 a share, noting that MISC’s flat y-t-d share price performance does not reflect its significantly stronger earnings outlook.
It also raised MISC’s FY26 earnings by 18% to RM3.7bil, implying earnings will more than double from RM1.6bil in FY25, with around RM1bil quarterly earnings expected in both 3Q26 and 4Q26.
