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Friday, August 17, 2012

MISC- the recovery shall begin

Results Update

MISC returned to profit in QE30/6/2012 when it recorded a net profit of RM381 million. Revenue was up 3.4% q-o-q but declined by 4.0% y-o-y to RM2.49 billion. The improved bottom-line was attributed to “ higher contributions from the offshore and tank terminal businesses. In addition, one-off settlement arising from early redelivery of vessels on time charter contracts has also reduced the losses in the petroleum business.” MISC's bottom-line has also benefited from lower losses incurred by the liner related business since it exited that business during QE30/6/2012.





Table: MISC's last 8 quarterly results


Chart 1: MISC's last 25 quarterly results

Valuation

MISC (at RM4.49) is now trading at a PE of 13 times (based on annualized EPS of 34 sen). At this PE multiple, MISC is deemed fully valued. However, without the drag from the liner related business, MISC's results may surprise on the upside.

Technical outlook

MISC is still in an intermediate downtrend line with resistance at RM4.60.


Chart 2: MISC's daily chart as at Aug 17, 2012_3.00pm (Source: Tradesignum)

Conclusion

Based on improving financial performance and the exit from the liner related business, MISC is rated a good stock for long-term investment. If MISC can break above the RM4.60, it can even be a trading BUY.

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