Results Update
For QE31/12/2015, MISC's net profit increased by 56% q-o-q but dropped 22% y-o-y to RM753 million while revenue rose 32% q-o-q or 45% y-o-y to RM3.3 billion. Revenue increased q-o-q due to recognition of EPC revenue for a finance lease asset under construction in Offshore business. Profits also increased q-o-q mainly due to recognition of compensation for early termination of term contracts for 2 vessels in LNG business. The latter - being a compensation for contracts terminated- means that future earning will be affected. The former which could lead to early recognition of earning may "borrow" against future earning. Both of these would suggest that earning in the future could be lower than what's reported now.
Table: MISC's last 8 quarterly results
Chart 1: MISC's last 38 quarterly results
Valuation
MISC (RM8.48 last Friday) is now trading at a PE of 15.4.times (based on last 4 quarterly EPS of 55 sen). At this PE, MISC is deemed fully valued.
Technical Outlook
MISC is in an uptrend line with support at RM8.30-8.40. If this support is violated, MISC may drop to its strong horizontal support at RM7.50.
Chart 2: MISC's weekly chart as at Feb 5, 2016 (Source: ShareInvestor.com)
Chart 3: MISC's monthly chart as at Feb 5, 2016 (Source: ShareInvestor.com)
Conclusion
Based on challenging outlook ahead and full valuation, MISC is a good
stock to be avoided for now. For those who have the stock, you can only
hope that the uptrend line support at RM8.30-8.40 would remain intact.
Thus, MISC's rating is maintained as a HOLD.
Note:
Note:
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.
MISC (3816) - MISC: Earnings rose due to early profit recognition
http://nexttrade.blogspot.my/2016/02/misc-earnings-rose-due-to-early-profit.html
MISC, MISC (3816), 3816, EN3816, KLSE:MISC, Investing, nexttrade,
