KUALA LUMPUR: AmResearch has downgraded MISC BHD []'' to Hold from Buy previously and lowers its discounted cashflow-derived fair value to RM7.30 a share from RM11.80 a share.
The research house said on Friday, March 25 that it had cut its earnings projections and attached a higher 10% discount to its sum-of-parts valuation from 5% previously given deteriorating shipping fundamentals.
'We have cut our projections by 48-57% over FY11F-13F after factoring in lower tanker and container rates as well as higher bunker fuel cost assumptions. Reflecting our bearish view, our projections are now 32%-34% below consensus estimates over the FY11-13 forecast period,' it said.
AmResearch said tanker rates have been weaker than expected, as seen by the absence of winter peak in 4QCY10.'' Accelerating fleet growth and a shift forward in delayed orders means oversupply will worsen over the next 2 years.
The research house added that Clarksons projects global tanker fleet growth at 6.4% in 2011 and 6.7% in 2012 versus the past 4-year average fleet growth of 5.8%.
'MISC's valuation is already rich at 30x FY12F earnings, versus the broader market's PER of 14x. MISC's status as a high-beta cyclical stock positions it unfavourably in the current volatile market environment. At just 21% YoY EPS growth and 114% premium valuation to the KLCI, MISC is likely to underperform the index over the next 12 months,' it said.
The research house said on Friday, March 25 that it had cut its earnings projections and attached a higher 10% discount to its sum-of-parts valuation from 5% previously given deteriorating shipping fundamentals.
'We have cut our projections by 48-57% over FY11F-13F after factoring in lower tanker and container rates as well as higher bunker fuel cost assumptions. Reflecting our bearish view, our projections are now 32%-34% below consensus estimates over the FY11-13 forecast period,' it said.
AmResearch said tanker rates have been weaker than expected, as seen by the absence of winter peak in 4QCY10.'' Accelerating fleet growth and a shift forward in delayed orders means oversupply will worsen over the next 2 years.
The research house added that Clarksons projects global tanker fleet growth at 6.4% in 2011 and 6.7% in 2012 versus the past 4-year average fleet growth of 5.8%.
'MISC's valuation is already rich at 30x FY12F earnings, versus the broader market's PER of 14x. MISC's status as a high-beta cyclical stock positions it unfavourably in the current volatile market environment. At just 21% YoY EPS growth and 114% premium valuation to the KLCI, MISC is likely to underperform the index over the next 12 months,' it said.
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