10 July 2025
MISC (MISC MK): Navigating Shifts With Strength; Maintain BUY
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | 0.0 | (1.3) | 12.8 | 6.3 | (13.2) |
| Relative | 6.9 | (1.9) | 3.6 | 10.8 | (7.9) |
| 52-wk Price low/high (MYR) | 6.72 – 8.79 | ||||
Chart: MISC (MISC MK) Price Close vs Relative to FBM KLCI (RHS)
Source: Bloomberg
- Keep BUY and MYR9.70 TP (SOP), 28% upside, c.5% yield. MISC’s stakeholder engagement session yesterday was well attended by corporates, fund managers, analysts, and industry experts. Following the session, we remain optimistic on the group’s medium-term outlook despite a challenging environment. This is supported by its long-term charter contracts and ongoing fleet modernisation. Growth prospects are further supported by its positioning in the FPSO supercycle and growing momentum in green energy.
- Navigating a challenging landscape. MISC expects minimal impact from trade headwinds, with its LNG and petroleum fleets largely backed by long-term charters. Exposure to China-built vessels in the US Gulf is minimal, with flexibility to redeploy if required. In managing geopolitical risks, the group has rerouted vessels via the Cape of Good Hope, supported by real-time monitoring and close coordination with authorities. While oil majors pivot back to traditional oil and gas, highlighting energy transition risks, the maritime sector continues to move forward under clear regulatory direction and mounting pressure to decarbonise. To support this, MISC has established a dedicated task force to navigate its decarbonisation journey.
- Strengthening its core business. MISC continues to build resilience and sustain long-term cash flows across its core segments. In LNG shipping, the group is rejuvenating its fleet with 19 modern LNGCs scheduled for delivery up to 2027. For its petroleum segment, fleet rejuvenation includes dual-fuel (DF) tankers – charters have been secured for three ammonia DF Aframaxes (delivery in 2027-2028) and two LNG DF Aframaxes. On the offshore front, MISC is preparing bids to capitalise on the FPSO supercycle following the successful delivery of Mero 3. The group is also exploring floating CO2 injection solutions, leveraging synergies between its Offshore and New Energy (NED) divisions. For the heavy engineering (HE) segment, the focus is on strengthening orderbook quality and positioning the yard as a preferred partner for LNGC drydocking repairs and conversions.
- Building a sustainable growth engine. MISC’s NED is positioned to capture energy transition opportunities. Focus areas include ammonia shipping, carbon capture and storage (CCS), liquefied CO2 (LCO2), and commissioning service operation vessels (CSOVs) for offshore wind support. As of FY24, c.5% of MISC’s operating cash flow stems from this segment, driven mainly by contributions from HE offshore wind and Kasawari CCS-related work.
- Forecasts maintained. Our SOP-based TP is kept at MYR9.70, and includes an unchanged 4% ESG discount based on an ESG score of 2.8. MISC’s balance sheet remains solid, and cash flow is expected to trend at or above MYR1bn, which will be key in supporting both dividend payouts and continued investment into new energy initiatives.
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 14,272 | 13,238 | 13,614 | 13,718 | 13,899 |
| Recurring net profit (MYRm) | 2,212 | 2,085 | 2,335 | 2,513 | 2,528 |
| Recurring net profit growth (%) | 6.0 | (5.8) | 12.0 | 7.6 | 0.6 |
| Recurring P/E (x) | 15.34 | 16.27 | 14.53 | 13.50 | 13.42 |
| P/B (x) | 0.9 | 0.9 | 0.9 | 0.9 | 0.8 |
| P/CF (x) | 5.96 | 7.93 | 4.89 | 6.35 | 5.86 |
| Dividend Yield (%) | 4.7 | 4.7 | 4.7 | 5.0 | 5.0 |
| EV/EBITDA (x) | 9.34 | 8.49 | 8.04 | 7.70 | 7.55 |
| Return on average equity (%) | 5.5 | 3.1 | 6.1 | 6.5 | 6.4 |
| Net debt to equity (%) | 24.6 | 23.0 | 23.3 | 27.8 | 31.1 |
Source: Company data, RHB
Overall ESG Score: 2.8 (out of 4)
E Score: 2.0 (MODERATE)
S Score: 3.3 (EXCELLENT)
G Score: 3.7 (EXCELLENT)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis
MISC’s total greenhouse gas (GHG) emissions decreased by 7% YoY to 6m tCO2e due to its continuous efforts in adopting clean energy solutions.
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | 4,200,139 | 4,120,702 | 3,800,082 | na |
| Scope 2 | 40,581 | 39,875 | 45,024 | na |
| Scope 3 | 2,447,044 | 2,345,620 | 2,198,289 | na |
| Total emissions | 6,687,764 | 6,506,197 | 6,043,395 | na |
Source: Company data, RHB
Latest ESG-Related Developments
MISC continues to integrate carbon pricing considerations into its investment decisions through the group’s Internal Carbon Pricing Framework. With partners, the group will explore potential business opportunities and jointly invest in the development of LCO2 carriers to transport captured CO2 to storage sites in Malaysia.
The group also signed MoUs to take the lead in developing and constructing zero emission tankers and zero-emission ammonia-fuelled vessels.
ESG Unbundled
Overall ESG Score: 2.8 (out of 4)
Last Updated: 29 May 2025
E Score: 2.0 (MODERATE)
MISC is involved in multiple global environmental initiatives as the group has set a medium-term target of reducing 50% GHG intensity by 2030. It currently owns green vessels, and has also invested in R&D for the future production of such vessels. The group’s total GHG emissions decreased by 7% YoY to 6m tCO2e due to its continuous efforts in adopting clean energy solutions.
S Score: 3.3 (EXCELLENT)
MISC won awards for its health & safety policies, and is actively involved in community engagement, as well as invests heavily in employee relations. The group also participates in various community engagements eg its Mersing Islands Initiative on Reef Conservation and UMT-MMS Sea Turtle Conservation Initiative.
G Score: 3.7 (EXCELLENT)
MISC provides high levels of transparency and disclosure, ensures shareholder rights are protected. The group maintains a board independence level that is in line with the Malaysian Code on Corporate Governance with 75% independent directors and 44% female representation.
ESG Rating History
Source: RHB
Financial Exhibits
Key drivers
- Higher tanker charter rates;
- Offshore contract awards;
- New LNG contract awards.
Key risks
- Higher vessel operating costs;
- Contract terminations;
- Regulatory risks.
Company Profile
MISC is an international energy shipping company and maritime solutions provider.
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Recurring EPS | 0.50 | 0.47 | 0.52 | 0.56 | 0.57 |
| DPS | 0.36 | 0.36 | 0.36 | 0.38 | 0.38 |
| BVPS | 8.80 | 8.42 | 8.59 | 8.77 | 8.96 |
| Return on average equity (%) | 5.5 | 3.1 | 6.1 | 6.5 | 6.4 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | 15.34 | 16.27 | 14.53 | 13.50 | 13.42 |
| P/B (x) | 0.9 | 0.9 | 0.9 | 0.9 | 0.8 |
| FCF Yield (%) | 9.4 | 7.3 | 5.7 | 1.0 | 2.3 |
| Dividend Yield (%) | 4.7 | 4.7 | 4.7 | 5.0 | 5.0 |
| EV/EBITDA (x) | 9.34 | 8.49 | 8.04 | 7.70 | 7.55 |
| EV/EBIT (x) | 17.05 | 14.68 | 14.87 | 14.33 | 14.37 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover | 14,272 | 13,238 | 13,614 | 13,718 | 13,899 |
| Gross profit | 4,594 | 4,922 | 5,212 | 5,681 | 5,989 |
| EBITDA | 4,594 | 4,922 | 5,212 | 5,681 | 5,989 |
| Depreciation and amortisation | (2,076) | (2,076) | (2,396) | (2,630) | (2,843) |
| Operating profit | 2,519 | 2,846 | 2,816 | 3,052 | 3,146 |
| Net interest | (591) | (579) | (619) | (653) | (719) |
| Pre-tax profit | 2,094 | 1,284 | 2,468 | 2,650 | 2,665 |
| Taxation | (135) | (50) | (52) | (56) | (56) |
| Reported net profit | 2,124 | 1,194 | 2,335 | 2,513 | 2,528 |
| Recurring net profit | 2,212 | 2,085 | 2,335 | 2,513 | 2,528 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Change in working capital | 351 | (496) | 1,784 | (287) | (147) |
| Cash flow from operations | 5,696 | 4,277 | 6,944 | 5,339 | 5,786 |
| Capex | (2,523) | (1,813) | (5,000) | (5,000) | (5,000) |
| Cash flow from investing activities | (1,866) | (1,192) | (5,000) | (5,000) | (5,000) |
| Dividends paid | (1,607) | (1,607) | (1,607) | (1,696) | (1,696) |
| Cash flow from financing activities | (3,920) | (4,166) | (474) | (597) | (662) |
| Cash at beginning of period | 7,134 | 7,732 | 6,677 | 8,147 | 7,889 |
| Net change in cash | (90) | (1,080) | 1,471 | (258) | 124 |
| Ending balance cash | 7,273 | 6,496 | 8,147 | 7,889 | 8,013 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 7,732 | 6,677 | 8,147 | 7,889 | 8,013 |
| Tangible fixed assets | 25,635 | 23,665 | 26,270 | 28,640 | 30,797 |
| Total investments | 1,485 | 1,660 | 1,930 | 2,181 | 2,420 |
| Total assets | 65,060 | 60,435 | 63,172 | 65,566 | 68,143 |
| Short-term debt | 1,719 | 3,333 | 3,333 | 3,333 | 3,333 |
| Total long-term debt | 15,826 | 12,161 | 13,913 | 15,665 | 17,418 |
| Total liabilities | 25,094 | 22,122 | 24,049 | 25,545 | 27,209 |
| Total equity | 39,966 | 38,314 | 39,123 | 40,021 | 40,934 |
| Total liabilities & equity | 65,060 | 60,435 | 63,172 | 65,566 | 68,143 |
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Revenue growth (%) | 2.9 | (7.2) | 2.8 | 0.8 | 1.3 |
| Recurrent EPS growth (%) | 6.0 | (5.8) | 12.0 | 7.6 | 0.6 |
| Gross margin (%) | 32.2 | 37.2 | 38.3 | 41.4 | 43.1 |
| Operating EBITDA margin (%) | 32.2 | 37.2 | 38.3 | 41.4 | 43.1 |
| Net profit margin (%) | 14.9 | 9.0 | 17.1 | 18.3 | 18.2 |
| Dividend payout ratio (%) | 75.7 | 134.6 | 68.8 | 67.5 | 67.1 |
| Capex/sales (%) | 17.7 | 13.7 | 36.7 | 36.4 | 36.0 |
| Interest cover (x) | 3.45 | 3.96 | 4.30 | 4.43 | 4.17 |
Source: Company data, RHB
Figure 1: SOP valuation
| Segments | FY25F (MYRm) | Remarks |
|---|---|---|
| Petroleum tankers | 9,644 | 1.1x P/BV. |
| LNG tankers | 23,601 | Discounted FCF to firm at 7.5% WACC. |
| Offshore | 20,020 | Discounted FCF to firm at 7.5% WACC. |
| Heavy engineering | 660 | Based on Malaysia Marine and Heavy Engineering’s (MMHE MK, BUY, TP: MYR0.62) TP |
| Total value | 53,926 | |
| Net cash/(debt) | -8,818 | Net debt end-FY24 |
| Shares outstanding (m) | 4,464 | |
| ESG premium/discount | -4% | |
| TP (MYR) | 9.70 |
Source: RHB
Recommendation Chart
Recommendation & Target Price Chart
Source: RHB, Bloomberg
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-05-29 | Buy | 9.70 | 7.52 |
| 2025-02-24 | Buy | 9.70 | 7.31 |
| 2024-11-15 | Buy | 9.27 | 7.60 |
| 2024-10-02 | Buy | 9.31 | 7.90 |
| 2024-08-25 | Buy | 9.84 | 8.59 |
| 2024-05-31 | Buy | 9.35 | 8.34 |
| 2024-02-28 | Buy | 8.94 | 7.58 |
| 2023-11-23 | Buy | 8.12 | 7.19 |
| 2023-08-25 | Buy | 8.12 | 7.16 |
| 2023-05-24 | Buy | 8.18 | 7.30 |
| 2023-02-15 | Buy | 8.43 | 7.33 |
| 2022-11-20 | Buy | 8.10 | 7.20 |
| 2022-11-04 | Buy | 8.04 | 7.20 |
| 2022-08-19 | Buy | 7.79 | 6.90 |
| 2022-05-27 | Neutral | 7.79 | 7.01 |
Source: RHB, Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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| Analyst | Company |
|---|---|
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