February 28, 2011

MISC - OSK maintains 'neutral' call on MISC

Stock Name: MISC
Company Name: MISC BHD
Research House: OSK

OSK Research has maintained a "neutral" call on MISC Bhd, the world's biggest owner-operator of liquefied natural gas tankers, but revised downwards its target price to RM8.20 from RM8.72 previously.

"We trimmed our revenue for financial year 2011 and financial year 2012 by 2.3 per cent in view of the weaker volume from the container segment and after incorporating a lower rate for its petroleum tanker division amid a higher bunker costs assumption," OSK said in a research note today.

It said the outlook remained bearish as higher bunker prices amid a relatively weak tanker market hit by a supply glut, dealt a double whammy on MISC's earnings.

It said while recent tanker rates had benefited from the sharp oil price and a supply cut from Libya, the reality is that the vessel supply glut and the absence of physical oil goods to deliver, continued to weigh down rates over the past two weeks.

MISC's pre-tax profit for the third quarter ended Dec 31, 2010 soared to RM1.579 billion compared with RM191.627 million in the corresponding quarter of 2009.

Meanwhile, HwangDBS Vickers Research also dowNgraded its target price for MISC to RM8.30 from RM8.90.

It expects MISC's tanker market to remain weak as more newbuilds enter the market while oil demand growth IS projected to slow this year.

"Container losses may narrow but we are concerned about MISC's crude tanker and chemical shipping units which present downside risks to earnings," it added. -- Bernama

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