MISC: Shipping Group Secures Major LNG Charter, Analyst Maintains Hold
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A prominent shipping group has successfully secured a significant long-term contract for the charter of newbuild liquefied natural gas carriers (LNGCs), reinforcing its strategic position in the energy sector. The agreement, facilitated with a major national oil and gas company, is expected to enhance the group’s earnings visibility over the coming decades.
Contract Details
The company announced it has received a Letter of Award (LOA) for the long-term time charter of three newbuild LNGCs. Each vessel will be chartered for a firm period of 20 years, with commencement slated for 2029. Concurrently, shipbuilding contracts for these vessels have been entered into with Hudong-Zhonghua Shipbuilding (Group) Co. Ltd. These LNGCs are set to support the national oil and gas company’s anticipated LNG production growth and will contribute to the shipping group’s fleet rejuvenation program by introducing modern, more energy-efficient vessels with lower emissions intensity.
Analyst Commentary
TA Securities views this announcement as strategically positive, noting its role in reinforcing the shipping group’s position as a core LNG shipping partner and supporting its ongoing fleet rejuvenation strategy. The introduction of these modern newbuild LNG carriers under 20-year firm charters is expected to accelerate the group’s transition towards a more fuel-efficient and lower-emission LNG fleet, thereby improving long-term competitiveness amid tightening regulatory and environmental standards. The investment bank highlighted that while earnings contribution from this contract is long-dated, it significantly enhances long-term earnings visibility, limits exposure to spot market volatility, and carries minimal counterparty risk due to the national oil company linkage.
Outlook and Valuation
Despite the strategic importance of the contract, TA Securities does not anticipate a material near-term earnings impact, as vessel deliveries and charter commencement are not expected until FY29F. The project is not projected to affect FY26F-27F financials, with contributions only beginning from FY29F onwards. Consequently, the investment bank maintains its “HOLD” recommendation on the company’s shares, with an unchanged target price of RM8.40 per share, based on 16.5x CY25 EPS.
