Hot Stock MISC, clouded by denied bribery report, falls 2% despite 4Q strong profit

by **Cals** Fri 14 Feb 2014, 17:10

Hot Stock MISC, clouded by denied bribery report, falls 2% despite 4Q strong profit

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Friday, 14 February 2014 14:30

KUALA LUMPUR (Feb 14): MISC Bhd fell as much as 2% in morning trades despite posting strong profit in 4Q13, and an even more impressive gain for full-year 2013.

At 12.30 pm midday break, MISC fell 10 sen or 1.5% to RM6.40. The fourth top loser saw trades of 965,500 shares. It earlier hit a low of RM6.36.

MISC yesterday announced that its net profit jumped 50% year year (y-o-y) to RM1.08 billion in 4Q13 on a lower revenue of RM2.14 billion against RM2.31 billion.

For the full year, MISC’s net profit skyrocketed 170.7% y-o-y to RM2.09 billion from RM770.2 million. Revenue, however, slipped 0.9% to RM8.97 billion from RM9.05 billion.

The seemingly contradictory fall in price could be due to analysts' assessments that the stock was fully-valued, while reports of bribery involving the MISC continued to dog the state oil company shipping arm.

Hong Leong Investment Bank’s research analyst Daniel Wong said MISC’s share price was overvalued in view of its strong share price and was downgraded to 'hold' with a higher target (TP) price of RM6.28.

MIDF Research in a note said it reaffirmed ‘neutral’ on MISC with revised TP of RM5.35, as the research house saw tanker rate to be unsustainable.

Nevertheless, most research houses said they had upgraded their earnings forecast for MISC.

Another possible explanation for the share's decline could be linked to talks of a US10 million bribery scandal involving MISC and Dutch oil & gas firm SBM Offshore which refused to die down although it had reportedly been denied by the state oil company shipping arm.

A local news portal earlier this week, reported that the alleged MISC’s involvement was part of a larger global bribery and corruption scandal of more than RM834 million (US$250 million) revolving around SBM Offshore.

MISC was alleged to have paid a total of RM33.4 million to Barnado Limited and Delcom Limited, with regards to the floating production, storage, and offloading platform (FPSO) at the Kikeh field.

A Dutch news portal reported last week the document could be found on SBM Offshore’s Wikipedia page.

The document displayed on Wikipedia purportedly said: “Payments to Barnado and Delcom totaling approximately US$10,000,000, paid on (ie. by way of bribes) to “MISC” for Kikeh FPSO (leased to US oil company Murphy),” according to the document displayed on Wikipedia.