AmResarch is reaffirming its non-consensus BUY rating on MISC BHD [] (MISC) and maintains its sum-of-parts derived fair value of RM11.80/share.
It said on Thursday, July 22 charter rates, in recent months, have turned in positive YoY growth following 17 months of contraction.
Tanker scrapping in 1H 2010 was 5% higher than 1H 2008. We sense that MISC is aggressively positioning itself for a tanker industry upcycle. A string of tanker acquisitions follows its recent buy of Vitol's tank terminal unit, VTTI.
“MISC's balance sheet remains strong, even after factoring in impact from recent vessel acquisitions of RM2.1bil and purchase of 50% stake in VTTI for RM2.8bil,” it said in a research note.
AmResearch said assuming MISC gears up to similar levels now, it estimates acquisition capacity at RM5bil-RM6bil - sufficient to buy small to mid scale tanker owners.
MISC is hugely under owned by the market having underperformed the FTSE Bursa Malaysia KLCI by 32% over the past 12 months.
“Convergence of the abovementioned catalysts should trigger a significant re-rating of MISC's share price, which in turn will trigger massive portfolio rebalancing by institutional funds given MISC's position as the 9th largest stock on the index with a significant 3.8% weighting,” it said.
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