KUALA LUMPUR: MISC Bhd's recent contract win will only improve the company's financial year ending December 31, 2025 (FY25) estimated earnings by less than three per cent, Hong Leong Investment Bank (HLIB) Research said.
The bank-backed research firm said the estimation was made based on the assumption of a daily charter rate of US$75,000 due to the comparatively smaller size of these vessels compared to Q-Flex and Q-Max LNG (liquefied natural gas) ships and the decline in long-term LNG charter rates in the last 10 years.
Besides that, HLIB Research said this would be further weighed down by the higher foreign exchange rate and an expected gross profit margin of 30 per cent, based on MISC's 25 per cent stake in the consortium.
"With that, we are only mildly positive on this development," it said in a note today.
Yesterday, the consortium was awarded long-term time charter parties (TCPs) by Qatar state-owned petroleum company QatarEnergy for seven 174,000 cubic metre new-built LNG carriers built by Hyundai Heavy Industries Co Ltd.
Apart from MISC, other consortium members are Nippon Yusen Kabushiki Kaisha (NYK), Kawasaki Kisen Kaisha Ltd (K-Line) and China LNG Shipping (Holdings) Ltd (CLNG).
MISC said that under the TCPs, the LNG carriers would be employed by QatarEnergy under long-term charters starting from 2025 onwards.
HLIB Research has maintained its "Hold" call on MISC, with an unchanged target price of RM7.67.
"We believe the current share price has already priced in the positives of higher petroleum spot tanker rates.
"We think that downside is supported for MISC due to its defensive nature, due to its portfolio of long-term charters which will provide consistent, recurring cash flows and its relatively fixed dividend payout policy of 33 sen per year.
"This translates into a decent dividend yield of 4.6 per cent annually based on the current share price," it added.