Maintain HOLD, TP: RM5.73
MISC recorded anet loss of RM1.8bn for 12MFY11 largely due to vessels impairment provisionsand a one-off disengagement costs to exit the liner business. Excluding (i)impairment provisions of RM750m; (ii) disengagement costs of liner(RM1,452.7m); (iii) gains from vessels divestment (RM114m); and (iv) gain fromdisposal of MMHE Engineering (RM36.4m), 12MFY11 net profit came in belowexpectations at RM335.5m (-73% y-o-y)--81% of our full-year forecast. Marketconsensus forecasted a net loss of RM466m in FY11. The variance from ourresults was mainly due to higher-than-expected bunker cost. However, wemaintain our FY12F earnings backed by LNG, oil & gas, and offshore andnarrower losses at both chemical and liner divisions. We maintain HOLD with aRM5.73 target price based on 1.2x P/BV (multiple is below its historicalaverage).
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