Thursday, August 10, 2017

FW: AmBank Research - MISC : Weak tanker rates dampen 2HFY17 outlook HOLD, 10 Aug 2017

 

STOCK FOCUS OF THE DAY                         

MISC : Weak tanker rates dampen 2HFY17 outlook                                                          HOLD

 

We maintain our HOLD recommendation on MISC with an unchanged fair value of RM7.35/share, which is at a 20% discount to our sum-of-parts valuation of RM9.19/share. This implies a FY17F EV/EBITDA of 9x, 1 SD below its 2-year average of 10x. MISC’s 1HFY17 interim dividend of 14 sen, translating to a payout of 51%, is within expectations.

Our MISC's FY17F-19F earnings are maintained as the group’s 1HFY17 core net profit of RM1,384mil (excluding RM134mil impairment for LNG vessel Tenaga Lima and RM17mil liquidation loss from MISC Agencies Japan) was generally within expectations, accounting for 63% of our FY17F earnings and 67% of consensus. As a comparison, 1HFY16 accounted for 60% of FY16 core net profit.

 

MISC’s 2QFY17 core net profit declined 19% QoQ to RM707mil in tandem with a 23% QoQ drop in revenue to RM2.3bil. We expect 2HFY17 earnings prospect to be weaker as tanker shipping rates have significantly declined since the beginning of the year amid rising newbuild deliveries, partly cushioned by the arrival of LNG vessel Seri Cempaka recently and additional petroleum tankers later this year. We believe the stock currently trades at a fair FY17F EV/EBITDA of 9x, slightly below its 2-year average of 10x.

 

Other:

Bumi Armada : Armada Perdana ops still suspended                                                        HOLD

 

 

QUICK TAKE

Bermaz Auto : Prelude to the next era                                                                                   BUY

 

 

STOCKS ON RADAR

Ann Joo Resources, Southern Steel, PMB Technology, Allianz Malaysia

 

 

ECONOMIC HIGHLIGHT

China : Not rate hike but needs alternative policies

 

 

NEWS HIGHLIGHTS

Currency Trade  : Bank Negara lambasts SGX’s introduction of ringgit futures

TA Global : TA Global’s unit to sell property in Australia

Minetech Resources: Minetech unit bags RM35.2mil MRT2 job

Property Sector: TRX City in talks with potential investors

 

 

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