Period 2Q12
Actual vs. Expectations
MISC’s 2Q12 net
profit (continuing operations) of M498.8m was in line with our FY12 estimate,
making up 49% of our RM1.0b forecast.
Including the loss
from the liner division (1QFY12: RM537.8m and 2QFY12: RM44.9m), the results
only made up 17% of the consensus’ FY12 net profit estimate of RM522.4m.
The company has
reclassified its liner division as a discontinued
division, hence the change in our results summary breakdown as well.
Dividends No
dividend was declared.
Key Results Highlights
YoY, despite the
lower revenue (-4%), the 2QFY12 net profit was on the uptrend (+41.7%) largely
due to higher PBT margins from the offshore division and positive tax credits
in the quarter.
QoQ, the net profit
was significantly higher (+>100%) due to lower losses, especially from the Chemical
division. A one-off impairment amounting to RM116m was charged to the division
in 1QFY12.
We also highlight
that its liner losses were lower comparatively (YoY: - 74.7%, QoQ: 91.7%). 6
vessels were sold in 2QFY2012.
Outlook Additional fleet and capacity are expected
from 2H2012 and this should enhance the LNG division.
Tough time remains
for the Petroleum and Chemical business due to volatile charter rates,
unyielding bunker costs and the imbalance in the demand and supply of vessels.
Change to Forecasts
While the results are
within expectations, we note that our finance costs are too high and our EBIT
loss forecast for the Petroleum and Chemical is still too conservative. We have
hence adjusted our MMHE’s FY12-14 forecasts slightly by -1.3%, -1.3% and -1.1%
respectively.
Our core net profit
forecasts exclude the losses from its liner division given MISC’s impending
exit from this business by late FY12.
Rating MAINTAIN MARKET PERFORM
Valuation We
have lowered our SoP-based target price to RM4.66 (from RM4.76). This is
because we have excluded the value of the assets of Petroleum and Chemical
Shipping as we expect the division to remain loss making in the near
future.
Risks 1)
Lower freight rates, 2) Higher bunker costs and 3) further unexpected
provisions for the winding up of the Liner business.
Source: Kenanga
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