MISC Bhd shares rose in the morning session today after the energy shipping company reported a 40 per cent year-on-year jump in fourth-quarter (4Q) earnings, although its bottom line for the financial year ended Dec 31, 2022 (FY2022) was marginally down.
At 11.38 am, its shares were 16 sen better at RM7.49 each, with 1.34 million shares changing hands.
Yesterday, MISC announced a net profit of RM645 million for 4Q FY2022, bringing its full-year earnings to RM1.82 billion versus RM1.83 billion in FY2021.
Analysts have revised upwards their FY2023 earnings projections for MISC.
In a note, MIDF Research upgraded its recommendation to a “buy” with a higher target price (TP) of RM8.16 per share (previously RM7.77) after revising its FY2023 and FY2024 earnings projections upward by 35 per cent and 48 per cent, respectively.
Meanwhile, Kenanga Research said MISC’s FY2022 earnings exceeded expectation and raised its FY2023 earnings forecast by 39 per cent. While retaining its “market perform” call on MISC, the research house raised the TP slightly to RM7.50 from RM7.30 previously.
Despite the 0.5 per cent year-on-year decline in MISC’s FY2022 earnings, the figure came above MIDF Research’s one-year estimate by 19 per cent and within consensus expectation.
“As global oil demand is projected to increase under a stable crude oil pricing and higher tanker rates, we continue to remain positive, yet cautious on the back of labour demand and shipyard competition.
“Despite the risks of the volatile oil and shipping market, we remain sanguine on MISC’s performance throughout FY2023,” MIDF Research said.
The research house reiterated its positive view on MISC, citing “the rising demand for both petroleum and liquefied natural gas (LNG) in Europe and East Asia, its strong order book, the positive prospects of the shipping and tanker market, and also continuous contribution and support for carbon capture and storage (CCS) and renewable energy projects.”
Meanwhile, Kenanga Research raised its FY2023 earnings forecast by 39 per cent to account for the higher spot freight rates for its petroleum shipping division.
“Overall, we like MISC for its long-term LNG contracts providing cash flow resiliency, and the potential to benefit from the recovery in petroleum tanker spot rates.
“However, over the short term, we believe the group could face some project cost escalations, especially in its Mero-3 FPSO (floating production storage and offloading facility),” it added.
