KUALA LUMPUR – MISC Bhd aims to preserve capital and is not expected to pursue large projects for the next two years, despite a rise in global floating production storage and offloading (FPSO) tender opportunities.
Kenanga Investment Bank Bhd (Kenanga IB) said the energy-related maritime solutions and services company is not looking for huge investments in the near future, particularly after securing the Mero 3 FPSO development offshore Brazil in 2020.
It said this was revealed at an MISC engagement session with its president and group chief executive officer Yee Yang Chien yesterday.
“However, one project the group is looking to participate in is the Limbayong FPSO, offshore Sarawak, with capital expenditure of about US$500 million (RM2.06 billion), with the project award date likely to be in 3QFY21.
“Over the longer term, MISC intends to land another major FPSO project in the next five years, coupled with another three small/mid-sized ones,” it said in a research note today.
Moving forward, the group plans to continue its strategy of retiring old fleets that are deemed uneconomical to be retrofitted, with upcoming newer fleets equipped to meet stricter emission targets.
“While the group still does not have an internal carbon emission target, the management has guided that it is something that the group is working on.
“The management is also seeking to further increase its environmental, social and corporate disclosure by the end-financial year 2021,” Kenanga IB said.
MISC expects the rates for spot tankers to remain challenging and petroleum tanker charter rates to remain weak and are not expected to recover to the 2020 levels anytime soon.
This would translate to continued weak performance for its petroleum shipping segment, of which 33% is exposed to the spot market as at 1QFY21.
Kenanga IB maintained its “outperform”’ call on MISC, with an unchanged target price of RM8.10.
At noon, MISC shares went up seven sen to RM6.97 with 509,700 shares transacted. – Bernama, June 2, 2021
