MORNING CALL: 2/11/23

The Edge TV

Maybank Investment Bank upgraded MISC to “buy”, with a revised target price of RM7.87 sharemarkets, stockmarket, sharetrading, equities, Bursa Malaysia, financialliteracy, investment, stockpics, investingideas, investmentportfolio

Transcript

00:00 This morning, it's MISC which just bagged a contract to supply, operate and maintain

00:06 an LNG floating storage unit in Pengerang with an estimated contract value of up to

00:12 US$213.7 million.

00:15 Maybank Investment Bank is mildly positive on the news, upgrading the stock to buy from

00:20 hold with a revised target price of RM7.87 from RM7.19 previously.

00:27 The counter ended trading yesterday at RM7.22.

00:30 So for this deal, Maybank is estimating daily charter rate of US$25,000, EBITDA margin of

00:37 80%, PAT margin of 30% and long-term US$RING assumption of 4.5.

00:43 Based on this, it expects this job to contribute about RM10.5 million to MISC's bottom line

00:49 annually which is less than 1% of its FY25 net profit estimate.

00:54 It's projecting the conversion capex to be US$50 million and the IRR for this venture

01:00 to be at a healthy level of 15%.

01:02 MISC will be converting its currently unutilised Putri Dali Masatu LNG carrier into the floating

01:09 storage unit for this job.

01:12 Maybank hiking its net profit forecasts by 7% for FY23, 1% for FY24 and 5% for FY25.

01:20 Dividend payout estimates for the three fiscal years raised to $0.37, $0.40 and $0.40 respectively.

01:27 The research house says it likes MISC for its defensive nature from its LTLNG charters

01:32 which provide recurring cash flows and attractive dividend yields of 5.1% to 5.5% for an investable

01:40 stable blue chip name.

01:41 So what does the street say?

01:43 According to Bloomberg data, there are 10 buy and 4 hold recommendations on MISC with

01:48 an average target price of RM8.21.

01:51 The stock settled yesterday at RM7.22, so that's a potential return of almost 14%.

01:58 [Music]

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