MISC’s earnings forecasts revised downwards
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.