We maintain HOLD on MISC with an unchanged sum-ofparts-derived fair value ofRM7.81/share (Exhibit 6) which implies an FY24F EV/EBITDA of 8.4x, slightly below its 3- year average of 9x.
Our FV incorporates a 3% premium to reflect our 4-star ESG rating, premised on the group’s ongoing sustainability initiatives (Exhibit 9).
MISC held a closed-door session with analysts to share on ongoing sustainability initiatives that was attended by Raja Azlan (Vice President of Finance & Corporate Planning), Captain Raja Sager (Vice President, Group HSSE & Sustainability) and Ausmal Kardin (Vice President of Legal, Corporate Secretarial & Compliance).
We note the importance of shipping to the global trade environment and the continued role that it is expected to play as the most carbon-efficient mode of freight transportation in the future.
The group has set an ambitious target of 50% reduction in greenhouse gas emissions (GHG) by 2030 and net zero carbon by 2050, a 10% rise when compared to the international benchmark set by the International Maritime Organisation (IMO)
We highlight 2 key initiatives in our view which is crucial and material to the group’s shipping operation: (i) greening of its fleet through renewal plans and voyage planning; and (ii) deployment of zero-carbon (ammonia) vessels by 2030.
We believe the group’s ongoing efforts to realign its shipping operation to the requirements of a low carbon environment in the future is crucial to its medium-term and long-term prospects.
We find the ongoing efforts as reaffirming our existing 4- star ESG rating on the company, which affords the group a 3% premium to our fair value.
MISC appears fairly valued at a current FY24F EV/EBITDA of 8.8x, close to its 3-year average of 9x.
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