MMC’s oil spill damages claim likely to be ‘less-than-material’

KUALA LUMPUR: MMC Corporation Bhd’s (MMC) filing for oil spill damages claim from PTP, even if there a favourable ruling may positively impact MMC, analysts believe these claims in discussion to be lessthan-material at this juncture.

In a filing on Bursa Malaysia, MMC announced that 70 per centowned subsidiary, Pelabuhan Tanjung Pelepas Sdn Bhd (PTP), has filed in rem and personam writ against Rising Star Shipping Sdn Bhd (RSS) and The Shipowners’ Mutual Protection and Indemnity Association (Luxembourg) Singapore Branch (the Club) on July 18, 2017 at the Kuala Lumpur High Court in relation to the oil spill at PTP’s premises on August 24, 2016 causing oil pollution damage.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) has maintained its forecasts on the group given that there is no further court development regarding the case.

And while a favourable ruling may positively impact MMC, Kenanga Research believed the claims in discussion to be lessthan-material at this juncture.

The research arm noted that assuming a scenario of a successful claim of RM31.9 million, this represented a oneoff gain of around six per cent of MMC’s financial year 2017 to 2018 estimate (FY17-18E) core net profit.

With no changes made to its earnings forecasts, Kenanga Research maintained its ‘outperform’ call on MMC and target price of RM2.90 per share, in view of the group’s growing ports and logistics segment.

“We expect the segment to continue being the primary earnings driver for the group, with the KVMRT 2 project to also underpin construction earnings,” the research arm said.

“A potential listing of its ports operations may also play as a positive rerating factor to unlock its full value.”