Tuesday, August 06, 2013

MISC- "If I can't have you, I'll buy my own ships!"

The latest move by Petroliam Nasional Bhd (Petronas) to procure its liquefied natural gas (LNG) tankers directly rather than from MISC Bhd would have very negative implication on MISC. This means that MISC's top-line & bottom-line will unlikely to grow or more likely to drop in the future. In addition, this in-your-face move that follows so shortly after the unsuccessful privatization attempt by Petronas would mean that Petronas may make another attempt at privatization in the near future. It would certainly like to see the share price moves lower so that its next offer, when it comes, will be well-received. This tantamount to shareholders' bullying- something which many did not expect from Petronas.

Under such circumstances, the only thing to do is to dispose of the stock and move on.

Chart: MISC's weekly chart as at Aug 6, 2013_9.45am (Source: Quickcharts)

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MISC.


Black Ink said...

I guess that is one way of looking at it.

Wouldn't it be better if someone else builds the ships and MISC just operates and manages for fees?

Wouldn't it be prudent to wait and see if LNG shipping rates improve over the next 12 months.

In addition, if 5.50 didn't tickle anyones' fancy last time, us it possible that it would be lower than 5.50 on the next go-around?

Mujahid Ibrahim said...

yes,i dont think petronas will do that way, the president should look into misc future as well, since misc crew is still consider as Petronas staff,would it hurt the misc financial if petronas bypassing the misc..??

Alex Lu said...

Hi Mujahid Ibrahim

If you owned a ship, the cost of transporting your goods (using the ship) is the cost of owning/operating the ship. If you chartered a ship, the cost of transporting your goods is the cost of leasing/operating the ship. The leasing cost should be higher than the cost of outright ownership.

By buying its owns ships, Petronas will firstly charter less ships from MISC. MISC's top-line and bottom-line will take a hit. Secondly, it may indirectly pressurize MISC to lower its charter rate otherwise Petronas may continue to substitute the chartered ship with their own ship. Finally, Petronas has stated that MISC's outlook will be challenging when it made its failed privatization attempt. Now, it likes to show everyone that that's the case. However, it seems not to be willing to let the nature takes its course. It may be taking steps to engineer a decline in MISC's profit!!

All in all, MISC's bottom-line has only one way to go: down!!