MISC - Fleet Renewal and Zero-carbon Vessels

Date: 
2023-12-01
Firm: 
AmInvest
Stock: 
Price Target: 
7.81
Price Call: 
HOLD
Last Price: 
7.55
Upside/Downside: 
+0.26 (3.44%)

Investment Highlights

  • We maintain HOLD on MISC with an unchanged sum-ofparts-derived fair value of RM7.81/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.

Source: AmInvest Research - 1 Dec 2023

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