MISC stock 28% above Petronas' buyout price last year

by **Cals** Fri 14 Mar 2014, 09:21

Published: Friday March 14, 2014 MYT 12:00:00 AM
Updated: Friday March 14, 2014 MYT 8:58:15 AM
[size=40]MISC stock 28% above Petronas' buyout price last year
BY DANIEL KHOO[/size]
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PETALING JAYA: MISC Bhd shares, which have been on a second renewed upward trend since the beginning of this year, hit its two-and-a-half-year high of RM7.07 this week and closed at RM6.98 yesterday.
At this price, the stock is 28% above the buyout price of RM5.50 per MISC share thatPetroliam Nasional Bhd (Petronas) had made back in April last year. That deal did not receive shareholders’ approval then.
Petronas’ acceptance from minority shareholders then amounted to 86.07%, which was 3.93% short of the 90% shareholding level to make the privatisation offer unconditional for a delisting process to happen.

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“Shareholders who had rejected the offer from Petronas have been vindicated,” said one dealer. “Investors are buying MISC largely because of the possibility of dividends as the industry outlook improves.”
MISC recently posted a good set of results for the fourth quarter, raking in a net profit of RM1.08bil which was a 50.2% jump from RM721.1mil previously.
This handsome profit surge happened despite Petronas’ warning of a bleak outlook for the shipping industry.
The better results were due to a higher share of profit from joint ventures, especiallyGumusut-Kakap Semi Floating Production System (L) Ltd and from the recognition of a one-off gain on the disposal of Gumusut Kakap Floating Production System through finance lease in the current quarter.
UOB Kay Hian analyst Danny Chan said earnings outlook were seen to be better this year on several positive catalysts in sight for MISC.
“Earnings are supposed to be slightly better as charter rates of petroleum tankers have been better so it’s positive. Chemical division is supposed to do better as well,” Chan told StarBiz.
He added that the Malaysia Marine and Heavy Engineering Holdings Bhd fabricator was also faring slightly better on a strong order book driven by the Malikai platform project.
In his results report for MISC’s fourth quarter, Chan had upgraded the stock to a hold with a raised target price of RM7. Consensus net profit for this year is expected to be at RM1.34bil with UOB’s forecast at 1.27 times the consensus.
Among analysts covering the stock on Bloomberg, half of them had a “buy” call on the stock, 33.3% rated the stock a “hold” while the rest had a “sell” call on the stock