MISC continued to bleed

Results Update

MISC has just announced its results for QE31/3/2012. Its net loss dropped 73% q-o-q but increased by 51% y-o-y to RM465 million. The q-o-q decline in net loss was attributable to a much higher net loss incurred in QE31/12/2011 as MISC provided for its exit from the Liner business. On the other hand, net loss rose y-o-y due to increased operating loss from the still-operational Liner business (to RM308 million from RM RM114 million previously) and lower operating profit in the Energy Related Shipping (to RM245 million from RM338 million previously). The latter was due to lower profit from the LNG sub-segment while the Petroleum & Chemical sub-segments incurred lower losses).

MISC's revenue declined by 16% q-o-q or 18% y-o-y to RM2.404 billion. All segments reported a drop in revenue but the bulk of the decline can be traced to the Other Energy business & the Integrated Liner Logistics.


Table 1: MISC's last 8 quarterly results


Table 2: MISC's segmental results for last 8 quarterly results


Chart 1: MISC's last 24 quarterly results

Valuation

After taking a big hit in QE31/12/2011 & continued to bleed in QE31/3/2012, MISC's earning going forward is highly uncertain. With an EPS of -44 sen for the last 4 quarters & poor visibility, MISC's PE would be a wild guess. The only thing that we can fallback on Price to Book which is 0.9 times (based on its closing price of RM4.09 at the end of the morning session & NTA per share of RM4.78 as at 31/3/2012). Due to heavy losses, it is a sensible move that MISC chose not to declare any dividend for FY2011.

Technical Outlook

MISC has tested its horizontal line at RM3.90-4.00 yesterday. If this support can hold, the stock may attempt to form a bottom here. If this level is also violated, then the stock may test its next support at the horizontal line at RM3.00.


Chart 2: MISC's monthly chart as at May 16, 2012 (Source: Tradesignum)

Conclusion

In my previous report, I opined that MISC could turnaround after it has exited the loss-making Liner business. While MISC has made provision for the exit, MISC has yet to discontinue the Liner business for QE31/3/2012. The logic behind the earlier call remain. One would have to be a contrarian & see the value & potential in this stock at the current depressed prices. While I do not advocate aggressive buying at the present time, I think that you can nibble slowly at prices between RM3.00 & RM4.00.