KUALA LUMPUR: MIDF Research has upgraded MISC Bhd’s stock from Neutral to Buy on the confidence that lower crude oil prices could spur demand for the shipping company’s charter services.
It said potential earnings disruption to the petroleum and liquefied natural gas (LNG) vessel freight rates either from geopolitical conflicts or the COVID-19 outbreak are manageable.
“MISC’s LNG segment is expected to remain robust due to the small exposure to the LNG spot market while any force majeure declaration by Chinese firms will still require LNG vessel charterers to honour the contract with MISC being the vessel owner,” it said in a note.
MIDF expects the company’s valuations to be higher if the potential job materialises for the offshore segment in the financial year 2020 worth around US$4 bil (RM16.89 bil) which includes floating production storage and offloading (FPSO) Mero 3 and FPSO Limbayong.
“More importantly, we also favour MISC for its attractive dividend yield of 4.5%. With the knee-jerk reaction to its share price, we opine that this presents an opportunity for investors to accumulate the stock,” it said.
The research house has maintained the target price for the stock at RM8.11.
At lunch break, shares of MISC jumped 28 sen to RM6.93 with 2.41 million transacted. – March 10, 2020, Bernama
