MISC price weakness an accumulation opportunity, says RHB
RHB Investment Bank Bhd sees MISC Bhds recent share price weakness as an accumulation opportunity due to the company’s solid operating cash flow growth of 10% to 15% predicted for the next two years, anchored by new asset additions and decent dividend yields.
RHB analyst Sean Lim, after attending a conference call with MISCs management, in a note today said the groups Mero 3 project, if successfully delivered, will open up more premium floating production storage and offloading (FPSO) leasing opportunities.
He cited the management as saying that MISC had received more FPSO tenders subsequent to the signing of a letter of intent with Petrobras. The successful delivery of this project should allow it to penetrate the Americas and West Africa.
To recap, Petrobras has awarded MISC a 22.5-year FPSO Mero 3 contract. The latter has identified its own very large crude carrier (VLCC), Bunga Kasturi 2, for conversion. The total conversion process will take about 40 months, whereby offshore hook-up and commissioning are scheduled to be in the second half of 2023 with final acceptance by the first half of 2024.
Lim also cited MISC’s management as saying that Siemens and Aker Engineering will be MISCs technical partners for topside modules and procurement matters while it looks to finalise Chinese yards for fabrication and hull conversion works by the end of this year.
Under such an arrangement, MISC will reduce its reliance on local contractors, which could be two to three times costlier in c....