MISC Bhd has secured a significant contract win that analysts believe will strengthen its long-term earnings visibility. The deal involves five newbuild liquefied natural gas (LNG) carriers, set to commence operations in 2030. These vessels, chartered by the PETRONAS group, will provide stable cash flows and reduce market risks associated with spot market volatility.
Kenanga Research estimates the five vessels could contribute RM162 million to MISC’s financial year 2026 earnings, representing a 6% increase. The research house assumes a charter rate of US$90,000 per day and an 8% internal rate of return, leading to a discounted cash flow accretion of 10 sen per share. The total capital expenditure is projected at US$1.1 billion, with 70% expected to be debt-funded.
Despite the positive outlook, Kenanga Research notes that returns on new LNG vessels are less attractive than a decade ago due to rising construction costs and stable charter rates. However, the firm maintained its “outperform” rating and raised its target price for MISC to RM9.30. MBSB Research also views the project as a low-risk, defensive growth strategy, maintaining its “buy” call with a target price of RM9.22.
MBSB Research estimates the five vessels could generate additional annual revenue of at least RM600 million, potentially expanding the division’s earnings before interest and tax margin by two to three percentage points. However, debt servicing and interest expenses could constrain net earnings during the first five years of operations, from 2030 to 2035.