Higher forecasts for MISC as 9MFY17 earnings’ surpass expectations

KUALA LUMPUR: MISC Bhd’s (MISC) first nine months of financial year 2017 (9MFY17) earnings have surpassed analysts’ expectations, leading to higher forecasts for the group.

In a filing on Bursa Malaysia, MISC revealed that group operating profit for the current nine monhts period ended September 30, 2017 of RM2.077 billion was RM290.2 million higher than the corresponding period’s profit of RM1.787 billion.

MISC’s 9MFY17 core net profit of RM2.02 billion was above AmInvestment Bank Bhd’s (AmInvestment Bank) expectations, accounting for 92 per cent of the research firm’s earlier FY17F earnings and 94 per cent of consensus.

This led to AmInvestment Bank’s FY17F-19F earnings for MISC to be raised by 15 per cent-17 per cent on higher liquefied natural gas (LNG) margin assumptions. “As a comparison, 9MFY14-9MFY16 accounted for 66 per cent-72 per cent of FY14-FY16 core net profit,” it said.

On another note, MISC’s third interim dividend of seven sen which doubled 9MFY17 dividend year on year (y-o-y) to 21 sen, translated to a payout of 49 per cent, which was within AmInvestment Bank’s expectations.

MISC’s 9MFY17 core profit after tax and minority interest (PATAMI) of RM1.725 billion was also above both the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus expectations, representing 82 per cent of its but 80 per cent of consensus’s full year FY17 forecasts.

MIDF Research noted that in 3QFY17, MISC recorded a core PATAMI of RM549.9 million.

“We view that the net fleet growth to be one of the main catalyst for such performance,” the research arm said.

On estimates, MIDF Research revised upward its earnings forecast for FY17, FY18 and FY19 by 9.2 per cent. 10.8 per cent and 8.2 per cent, respectively on the back of better-than-expected performance of the offshore segment and incoming vessels.

MIDF Research also revised its call ‘trading buy’ with an increased target price of RM7.45 per share.

The research arm’s call was predicated on contribution of the 3 Seri C Class vessels, removal of older tonnages from trade for demolition and FSO Benchamas 2 project progressing ahead of plan.

On the other hand, AmInvestment Bank maintained its ‘hold’ recommendation on MISC but with a higher fair value of RM7.75 per share, from an earlier RM7.35 per share.