Company Update - MISC
(SELL, downgrade)
- Sailing into choppy waters
The termination of 4 LNG charters by PETRONAS has
raised concerns on LNG earnings visibility. Petroleum charter rates are
likely to taper off due to vessel oversupply and tepid global crude shipping
demand. Meanwhile, lower term-to-spot ratios in the LNG and petroleum
segments could expose MISC to charter-rate volatility. We now expect FY16
core earnings to contract 14% yoy on lower tanker yields and margin pressure
from higher bunker costs. Downgrade to SELL from Hold with a lower TP of
RM6.70.
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