Nov 29, 2012

MISC: a bombed-out stock with turnaround potential

MISC BHD Stock Code  3816
Price: RM 4.20  Upside Potential RM 6.20

EPS:       2011: 0.16   2012: 0.24    2013: 0.30
PE:         2011:  25.6   2012: 17.8    2013:14.1
Growth:                       2012: 44%    2013: 27%

What went wrong?
Container business suffered heavy losses due to weak shipping rates and
decline in ship value. MISC also did not invest as much into the business to buy newer and bigger ships relative to competitors

What has management learnt and what are they doing different?
Management has since sold out and exited the liner business. As at end-
Sep12, the Group has sold all its container vessels.

What are the milestone to watch?
Improving quarterly earnings following disposal of liner business, which should result in increasing dividends. MISC will also likely benefit from future LNG and Oil & Gas projects as a result of Petronas' RM300bn capex for the next five years. Potential beneficiary of Petronas' upcoming Floating LNG (FLNG) project as well