KUALA LUMPUR (July 28): MISC Bhd (KL:MISC) may sell some of its assets for capital recycling as the energy shipping company is set for heavy spending in the coming years, said CIMB Securities.

Annual capital expenditure could double to as much as US$1.2 billion from its usual levels through 2030 to fund fleet renewal, offshore expansion, and new energy projects, the research firm said in a note on Tuesday after its analysts attended MISC’s investors briefing.

“To sustain its investment-grade rating from rating agencies, we believe MISC will refrain from increasing its borrowings materially from current levels by undertaking very large projects, unless it manages to recycle its capital,” CIMB Securities said.

MISC, which already owns one of the world’s largest fleets of liquefied natural gas carriers, plans to expand its fleet to 50 vessels by 2030 from 39 ships currently. The number of vessels carrying petroleum and products, meanwhile, is expected to grow to 78 vessels from 68 vessels.

The company is also eyeing floating production storage and offloading (FPSO) opportunities largely concentrated in Africa and Brazil.

However, undertaking such massive projects would likely require MISC to undertake capital recycling initiatives to “manage balance sheet capacity and project concentration risk,” including a partial stake sale of FPSO Marechal Duque de Caxias, CIMB Securities said.

“We believe this capital recycling angle will be a key enabler for MISC to participate in larger floater opportunities, while preserving its steady and predictable business model,” the house added.

The house kept the stock on 'buy' rating, in line with the recommendations of most analysts tracked by Bloomberg, and raised its target price to RM9.25 from RM9.19 to reflect the impact of new vessel deliveries.