MISC’s earn­ings fore­casts re­vised down­wards

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: MISC Bhd’s earn­ings fore­casts have been slashed by up to 27% on lower ves­sel util­i­sa­tion and char­ter rates.

AmRe­search has cut MISC’s earn­ings fore­cast by 7% to 9% for FY16 to FY18 on lower tanker rate as­sump­tion fol­low­ing its nine-month net profit of RM2.05 bil­lion that came be­low ex­pec­ta­tions.

MIDF Re­search also re­vised down­wards FY16 and FY17 earn­ings fore­casts by 20% and 27% re­spec­tively as it fac­tors in lower ves­sel util­i­sa­tion rate and time char­ter equiv­a­lent rates.

Hence, MIDF Re­search has ad­justed its tar­get price for MISC from RM8.05 to RM7.96, re­flect­ing the slight weak­ness in the liq­ue­fied nat­u­ral gas and pe­tro­leum seg­ments.

AmRe­search said while the win­ter peak de­mand in Q4 FY16 may drive tanker rates up tem­po­rar­ily, this hinges on the un­pre­dictable sever­ity of the cli­mate as a milder-than-ex­pected weather could mean lower en­ergy de­mand.

It noted that earn­ings vis­i­bil­ity is fur­ther clouded by higher bunker costs that have in­creased 9% quar­ter-on-quar­ter to US$295 (RM1,233) per tonne in Q3 FY16, and sub­se­quently risen by 8% to US$317 per tonne presently.

AmRe­search said large tanker char­ter rates re­main soft as very large crude car­rier rates fell by 14% month-on-month and 55% quar­ter-on-quar­ter on ex­cess in­ven­to­ries and sup­ply in­ter­rup­tion in West Africa.

“How­ever, smaller tanker de­mand ap­pears to be ris­ing as Suez­max daily spot char­ters rose four times to US$21,000 while Afra­max rose 57% to US$14,000 from higher Far East and Aus­tralian traf­fic,” it opined.

AmRe­search is main­tain­ing a “hold” call on MISC with a lower fair value of RM7.35 from RM8.10.

MISC shares ended down 27 sen, or 3.6%, at RM7.23 yes­ter­day, with 5.2 mil­lion units traded.

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