KUALA LUMPUR (March 26): MISC Bhd (KL:MISC) could potentially pay out higher dividends from this year onwards from a cash flow boost from a project in Brazil, Maybank Investment Bank said on Wednesday.

Mero-3, a floating production, storage, and offloading (FPSO) vessel contracted to an offshore field in Brazil, will rake in charter rates of US$595,000 per day beginning Oct 30, 2024, according to the research house’s estimates. The vessel has already achieved first oil in October 2024.

“This will boost MISC’s cash flows and could potentially translate into a higher dividend payout from 2025,” Maybank said, noting that its annual dividend payout forecast for 2025-2027 at 36 sen now appears “conservative”.

Mero-3 has been delayed for months before its delivery to Brazil. Under the contract, the FPSO has a 22.5-year firm charter period from the date of final acceptance by client Petróleo Brasileiro SA, more commonly known as Petrobras.

Formally named as FPSO Marechal Duque de Caxias, the FPSO could produce up to 180,000 barrels of oil and process up to 12 million cubic metres of gas per day, as well as store 1.45 million barrels of oil.

Despite recording an additional US$150 million (RM664 million) cost provision in the final quarter of 2024, “we are confident that MISC will begin on a new, clean slate for its offshore business unit segment in 2025,” Maybank said.

After Mero-3’s successful first oil, “we highlight that MISC has de-risked” from construction, project and delivery risks and cost overruns, the house said, adding that the delivery should also free up MISC’s balance sheet to bid for new jobs in the current global FPSO upcycle.

The house maintained MISC on a “buy” call, noting that a 5% dividend yield would support its stock price. While MISC has declined about 6% since the start of 2025, analysts are broadly bullish on the stock, with 12 “buy”, two “hold”, and no “sell” calls.

The average target price is RM8.57, according to Bloomberg, suggesting potential gain of up 20% in the next 12 months from the current price. The stock was trading at RM7.12 on Wednesday, giving the company a market capitalisation of nearly RM32 billion.