MISC rises 1.56% on 4Q earnings, dividend, rating upgrade

KUALA LUMPUR (Feb 19): Shares in MISC Bhd rose 1.56% at mid-morning today after it registered a net profit of RM556.5 million in its fourth quarter ended Dec 31, 2020 (Q4FY20), more than double the RM250 million reported a year earlier, as the shipping company narrowed its impairment loss during the period.

At 10.01am, MISC added 10 sen to RM6.50, valuing it at RM29.02 billion.

MISC had also declared a fourth tax-exempt dividend of 12 sen per share in respect of the financial year ended Dec 31, 2020 (FY20) amounting to RM535.6 million, to be paid on March 16, 2021.

In a results review today, MIDF Research said MISC’s share price has yet to recover from the beating it undertook late last year, presenting a window of opportunity to accumulate before it reverts to the fair value level.

It added that with the ongoing global vaccine rollouts, economic prospects around the globe are improving and can be gauged with better clarity in comparison to the darkest days of the pandemic last year.

MIDF upgraded MISC to “buy” at RM6.40 with an unchanged target price of RM7.81 and said it foresees vaccines as a tailwind for economic activities, which will be the catalyst for a boost on crude oil demands and energy consumption, and therefore benefit companies such as MISC.

However, the research house maintained its earnings estimation.

MIDF opined that despite MISC’s encouraging performance during 4Q20, an upward revision would only take place provided a more significant improvement occurs in terms of the overall crude oil demand.

In terms of 4QFY20 core earnings, the research house said MISC reported RM462.4 million (+26.6% y-o-y) on the back of higher revenue recorded at RM2.64 billion (+11.2% y-o-y).

“Overall, its cumulative 12M20 earnings performance remains strong whereby revenue was at RM9.40 billion (+4.9% y-o-y) and core earnings at RM2.13 billion (+32.2% y-o-y) therefore exceeded our core and consensus’ net profit estimate by 11.2% and 5.2% respectively,” it said.

According to the research house, MISC’s earnings growth in FY20 (+4.9 y-o-y) is underpinned by higher revenue contribution from several segments such as liquefied natural gas (recorded a revenue of RM2.65 billion), offshore (recorded a revenue of RM1.29 billion) and heavy engineering (recorded a revenue of RM1.57 billion).

Source: TheEdgeMarkets