KUALA LUMPUR: MISC Bhd is expected to record quarter-on-quarter (QoQ) earnings improvement in the fourth quarter (Q4) 2024.
This follows the achievement of final acceptance (FA) for Mero-3 on Nov 2, said Hong Leong Investment Bank Bhd (HLIB).
The standby rates prior to the FA and bareboat charter should lift its offshore unit in Q4 2024, the bank said in a note.
Meanwhile, HLIB said the petroleum segment will also deliver a better contribution due to improved charter rates of VLCC and Suezmax.
VLCC and Suezmax spot charter rates have shown double digit recovery in Q4 2024 so far, compared to the average of Q3 2024.
"Nonetheless, MISC believes the LNG division will remain challenging in the near term amid subdued LNG demand in Asia and high inventory levels in Europe, coupled with increasing vessel deliveries to the market," it said.
MISC posted Q3 2024 core earnings of RM331.1 million, bringing nine months of 2024 (9M24)'s sum to RM1.58 billion.
The results came in below HLIB's (65 per cent) and consensus (63 per cent) expectations.
"Core earnings slumped 40 per cent QoQ due to weaker contribution from petroleum segment (weaker charter rates and lower earning days), while offshore division dipped into operating losses no thanks to lower construction revenue for Mero-3 as it nears full completion stage.
"Overall, the firm decreased its financial year 2024 (FY24)/FY25/FY26 forecasts by 10 per cent/-5.6 per cent /-5.4 per cent.
HLIB kept its "Hold" call on the stock but lower the target price of RM7.99.