KUALA LUMPUR (Aug 26): Analysts expect energy shipping firm MISC Bhd (KL:MISC) to post softer earnings in the second half of 2025 (2HFY2025), weighed down by continued weakness in liquefied natural gas (LNG) and petroleum tanker spot rates.
They expect the market to stay soft in the last six months of the year, as more ships enter service while new LNG liquefaction projects face delays in bringing supply online.
"We expect a softer 2H2025F, driven by weaker contributions from the LNG and petroleum segments. However, overall earnings should remain supported by the full-year contribution from FPSO MDdC," said CIMB Securities in a note on Tuesday.
CIMB also highlighted that MISC’s associate losses are set to widen in 2H2025.
This comes as more of the six new LNG carriers for Qatar Energy are delivered, with costs shifting from capitalisation during construction to start-up and operating expenses once the ships enter service.
Even so, revenue from the offshore business was supported by the start of operations at a new floating, production, storage and offloading unit (FPSO).
CIMB reiterated its ‘buy’ call with an unchanged target price of RM9.19, saying the stock is trading below its long-term price-earnings average. It also expects MISC to deliver a steady dividend yield of around 4.7% annually for 2025-2027.
MISC reported a 14.1% year-on-year fall in net profit for the second quarter of FY2025 (2QFY2025). The first quarter had been lifted by a one-off gain when the FPSO Bunga Kertas commenced a new lease contract.
TA Securities considers the 2QFY2025 results to be within expectations, as it anticipates softer earnings in the coming quarters — particularly from the gas assets and petroleum segments — due to continued weakness in LNG and crude tanker spot rates.
Nonetheless, it noted that the group's marine and heavy engineering secured order book stands at RM5.2 billion, providing visibility and support for operations through 2028.
"The company is also targeting an increase in its heavy engineering tender book to approximately RM11 billion, presenting additional earnings opportunities from this robust pipeline," it said. TA Securities maintained its ‘buy’ call, with a target price of RM8.40.
The research house added that MISC's petroleum segment will continue to see subdued crude oil tanker rates on weaker Chinese demand and Opec+ production cuts, but strong tonne-mile demand is being supported by vessel rerouting, long-haul Atlantic-Asia trade and minimal fleet expansion.
At 10.21am, MISC shares were trading at RM7.57, down 13 sen on the day, valuing the group at RM33.79 billion.