KUALA LUMPUR: MISC Bhd's outlook remains bright due to its steady operating cash flow, on top of the anticipation of a bump-up in numbers due to Mero 3 from the second half (2H) of 2024, said RHB Research.
The firm said MISC's1H 2024 results are within expectations,with core earnings rising 20 per cent year-on-year (YoY).
"The better 1H24 core profit of RM1.2 billion was largely driven by improvements in the heavy equipment segment, which helped balance out weaker results in the offshore and liquified natural gas (LNG) units," it said in a note.
RHB Research said the Mero 3 had arrived offshore in Brazil and was preparing for first oil, which is expected by late third quarter of 2024 or early Q4 2024.
"This timeline is slightly delayed due to technical issues on Petrobras' subcontractor side - beyond MISC's control. Hence, the group will be pursuing the entitled standby rates," it said.
MISC is in discussions with several parties regarding the monetisation of Mero 3, which will be prioritised before tendering for other jobs – particularly larger ones in the RM2 billion range that will be pursued through partnerships.
RHB Research said MISC expects four, 11 and two new LNG carriers to be delivered in the financial years 2025 (FY25), FY26 and FY27, while the term-to-spot ratio is 90:10 for the petroleum division, and 80-85:20-15 for the gas division.
"The overall tanker market outlook remains positive, with increasing long-haul exports from the US, Brazil and Guyana as well as low fleet growth."
RHB Research reiterated its "Buy " call on MISC and raised the target price to RM9.84.