---
endpoint: analytics
pattern: Transport
status: done
latency_ms: 209584
conversation_id: 9b59fed9-43f2-4bde-a56b-3617b1c730a0
citations: 11
created: 2026-05-31 22:15:39Z
---

# How does MISC’s valuation compare to peers, and what justifies its premium/discount?

# MISC Berhad (MISC MK) — Valuation vs Peers

CLSA rates MISC **O-PF (Outperform)** with a **SOTP-derived 12-month target price of RM8.25** (+15% upside from RM7.20 reference) [7]. The stock is a global tanker/LNG/offshore peer, but the way it trades is unlike pure container/dry-bulk shippers — earnings come from long-dated charters, not freight-rate cycles, which is the central explanation for the valuation gap below.

## 1. Peer Comparable Table (per CLSA, Feb 2025 vintage)

CLSA's peer matrix benchmarks MISC against eight global shipping peers spanning Denmark, China, Taiwan, Korea, Japan, and Hong Kong [1].

| Peer | Ticker | Country | Mkt Cap (US$bn) | **PE FY1 (x)** | **PB (x)** | **Div Yld (%)** | **ROE (%)** | Net Debt/Eq (%) |
|---|---|---|---|---|---|---|---|---|
| AP Moller-Maersk | MAERSKB DC | Denmark | 27.1 | 19.5 | 0.6 | 1.5 | 2.8 | (6.3) |
| Cosco Shipping-A | 601919 CH | China | 30.3 | 4.7 | 1.0 | 10.7 | 22.9 | (51.9) |
| Evergreen Marine | 2603 TT | Taiwan | 14.1 | 3.3 | 0.8 | 7.0 | 26.4 | (24.4) |
| Korea Line | 005880 KS | Korea | 0.4 | 2.9 | 0.3 | 0.0 | 8.0 | 85.7 |
| **MISC** | **MISC MK** | **Malaysia** | **7.2** | **11.2** | **0.8** | **6.7** | **7.3** | **27.4** |
| Mitsui OSK | 9104 JP | Japan | 13.2 | 5.4 | 0.8 | 5.7 | 14.5 | 50.5 |
| Pacific Basin | 2343 HK | Hong Kong | 1.1 | 10.2 | 0.6 | 4.9 | 5.9 | n/a |
| Yang Ming | 2609 TT | Taiwan | 7.6 | 3.9 | 0.7 | 10.7 | 19.1 | n/a |
| **Peer Average** | | | | **7.6** | **0.7** | **5.9** | **13.4** | 13.5 |
| **Peer Median** | | | | **5.0** | **0.7** | **6.2** | **11.3** | 10.6 |

Source: CLSA, IBES for non-covered names, CLSA models for covered names [1].

## 2. Where MISC Trades — Premium or Discount?

The summary depends on which metric you anchor to:

- **PE (FY1): material PREMIUM.** MISC at **11.2x** vs peer median 5.0x and average 7.6x — a ~120% PE premium to the median and ~47% to the average [1][2]. On 2025E PE, the Jun-2025 Malaysia strategy table shows MISC at **11.9x 2025 / 12.0x 2026** [9].
- **PB: roughly IN-LINE.** MISC at **0.8x** vs median 0.7x [1] — a slight ~14% premium but well within dispersion. EV/EBITDA is **6.7x 2025 / 6.6x 2026** [8].
- **Dividend yield: IN-LINE / slight DISCOUNT to median.** **6.7% FY1** vs median 6.2% and average 5.9% [1]. CLSA models 6.3% / 6.3% / 6.6% for 2025–27 with a 75% payout ratio [2].
- **ROE: clear DISCOUNT to fundamentals.** **7.3%** vs peer median 11.3% and average 13.4% [1]. This is the single biggest gap and the analytical key — MISC's ROE is roughly half the peer median.
- **Historical absolute: TROUGH.** MISC was trading at **9.6x PE, or ~1 standard deviation below its long-run average of 18.4x** at the report date — i.e., relative to its own history, MISC was at the cheap end of its band, even while screening expensive on peer PE [3].

**Net verdict:** MISC trades at a **PE premium and ROE discount versus global tanker/container/dry-bulk peers**, but at a **discount to its own historical mid-cycle PE band**. The two readings are not contradictory once the business mix is understood.

## 3. What Justifies the Premium (vs Peers)

CLSA's investment thesis on MISC is **earnings stability**, not freight-cycle leverage [6]:

- **Long-term charter contracts**: MISC's LNG carriers and FPSOs sit on multi-year (often 15-20+ year) charters with Petronas and other oil majors, producing recurring contracted EBITDA rather than the spot-rate volatility that drives Cosco (601919), Evergreen (2603), Yang Ming (2609), and Mitsui OSK Lines (9104) [6]. Those container/dry-bulk peers print 20-26% ROEs in upcycles (FY1 ROE: Cosco 22.9%, Evergreen 26.4%, Yang Ming 19.1% [1]) but the market caps a low single-digit PE on those earnings because they are correctly viewed as cyclical-peak.
- **Brent crude support for charter rates** [6] — bullish oil environment underpins petroleum-tanker charter pricing into renewals.
- **Lack of carrier supply**: tight new-build availability in MISC's specialty segments (LNG, shuttle tankers, FPSO) supports day rates and contract economics [6].
- **High payout dividend** [2]: 75% payout ratio gives MISC a **6.3-6.7% yield**, which is closer to a utility/infrastructure cash-yield profile than to a shipping name. This rewards a higher multiple on stable earnings.
- **PETRONAS backstop**: PETRONAS owns 51.0% and EPF 12.9% — a quasi-sovereign sponsor whose captive demand stabilizes the LNG and offshore order book [7].
- **Sum-of-the-Parts (SOTP) methodology drives the TP**, not a single PE multiple [4][5]. The RM8.25 TP is built bottom-up:

| Segment | Value (RM/share) | Basis |
|---|---|---|
| LNG Shipping (existing fleet) | 4.18 | 10.1x EV/EBITDA (in line with peer mean) |
| LNG Shipping (recent wins) | 1.23 | DCF at 7.9% WACC |
| Petroleum (existing) | 1.91 | Estimated market value |
| Petroleum (shuttle tankers) | 1.34 | DCF at 7.9% WACC |
| Offshore (existing) | 1.18 | 10.1x EV/EBITDA |
| Offshore — Mero 3 | 0.89 | DCF, 50% stake |
| MMHE (66.5% stake) | 0.18 | Consensus market value |
| Bintulu Port (2.3%) | 0.01 | Market value |
| **Gross SOTP** | **10.91** | |
| Less: FY25 Net Debt | (2.63) | |
| Less: FY25 Minority Interest | (0.07) | |
| **SOTP equity value** | **RM 8.25** | |

Source: CLSA [4].

The fact that **LNG and Offshore are EV/EBITDA-valued at ~10x** (utility-like) rather than container-shipper PE (low-single-digit) is the *quantitative* expression of the qualitative premium.

## 4. What Justifies the Discount (vs MISC's Own History & Top-Picks Cohort)

Despite the peer-relative PE premium, several factors keep MISC below its own historical mean and below CLSA's "compounder" cohort:

- **Lower ROE base**: 7.3% 2025 / 7.1% 2026 [1][8] — well below peer median 11.3%. ROE has been depressed by impairments (RM735.5m provisions and RM241.1m receivables losses dragged 4Q24 to a reported loss [chunk index 3 of doc 607951336]) and by the capital-intensive LNG/offshore fleet build.
- **EPS estimate cuts**: Bloomberg consensus for MISC's 2025 EPS was **revised down -4.55% between Jan and Apr 2025**, and further to **-6.8% by Jun 2025** (from RM0.57 to RM0.53), making MISC one of the four largest negative revisions in FBMKLCI alongside Gamuda, CelcomDigi, and IHH Healthcare [11].
- **Bumi Armada deal overhang**: CLSA explicitly flags that "should MISC's acquisition of Bumi Armada be called off, we think the market will be relieved" [10] — a deal-risk discount embedded in the share price.
- **Gearing**: net debt/equity at 27.4% (2025E) trending to 20.3% (2027E) is moderate but higher than container peers running net cash positions; gross debt/EBITDA at 2.5x and net debt/EBITDA at 1.8x for 2025 [8].
- **Modest growth profile after 2025 rebase**: post-2024 trough (EPS -43.8%), 2025 sees a 139.3% rebound (mostly impairment normalization), but 2026/27 growth is essentially flat at -0.6%/+2.2% [2] — i.e., no underlying growth story to support multiple expansion beyond yield.

## 5. CLSA's Synthesis

Despite the discount-vs-history backdrop, CLSA is constructive. The Jun-2025 Malaysia strategy lists **MISC alongside TNB and CIMB as "the most compelling among our top picks"** [10], reflecting the view that:
- Trough valuation (-1 SD vs own history) gives an entry-point discount [3].
- 6.3-6.7% sustainable dividend yield is well covered by 9.6-10.7% FCF yield 2025-27 [2].
- SOTP fair value of RM8.25 implies +14.6% upside from the Apr-2025 reference price of RM7.20 [7][9].

The upgrade from Hold to Outperform in Feb 2025 was triggered by the share-price drawdown (-6.2% YTD) compressing the valuation to the trough end of the band, not by an improvement in operating fundamentals [3].

---

## Bottom Line

| Lens | MISC vs Peers | Justification |
|---|---|---|
| **PE FY1 (11.2x vs median 5.0x)** | **PREMIUM** | Charter-backed earnings stability; recurring revenue from LNG/FPSO contracts vs cyclical container/dry-bulk peers |
| **PB (0.8x vs median 0.7x)** | IN-LINE | No major divergence |
| **Div Yield (6.7% vs median 6.2%)** | IN-LINE | 75% payout supports yield; not a competitive moat |
| **ROE (7.3% vs median 11.3%)** | **DISCOUNT** | Heavy asset base (LNG/FPSO/offshore); impairment drag; lower ROE-on-capital profile is the trade-off for low volatility |
| **Own historical PE (9.6x vs 18.4x avg)** | **DISCOUNT** | -1 SD trough — explains why CLSA upgraded to O-PF on share-price weakness rather than earnings upside |
| **Bumi Armada overhang** | DISCOUNT | Deal-risk premium embedded; potential re-rating catalyst on cancellation |

The **premium versus container/dry-bulk peers is structural and deserved** — MISC is closer to a utility/infrastructure-asset operator than a pure shipper. The **discount versus its own history and against CLSA's RM8.25 SOTP fair value** is what makes the stock interesting at current levels, with the path to closing the gap requiring (a) impairment cycle to end, (b) ROE recovery toward 7-8%, and (c) Bumi Armada deal resolution.

---

**Sources**
[1] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — peer/customer matrix table — 607951336LinqAlpha.PDF
[2] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — financials summary — 607951336LinqAlpha.PDF
[3] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — trough valuation, -1 SD vs 18.4x avg — 607951336LinqAlpha.PDF
[4] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — SOTP table to RM8.25 — 607951336LinqAlpha.PDF
[5] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — SOTP methodology — 607951336LinqAlpha.PDF
[6] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — investment thesis — 607951336LinqAlpha.PDF
[7] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — price target, ownership — 607951336LinqAlpha.PDF
[8] MISC – O-PF (Masked by provisions), CLSA, 23-Feb-2025 — key ratios (EV/EBITDA, gearing) — 607951336LinqAlpha.PDF
[9] Malaysia strategy (1Q25 results: outlook not as dire), CLSA, 9-Jun-2025 — top-picks comp sheet — 607961581LinqAlpha.PDF
[10] Malaysia strategy (1Q25 results: outlook not as dire), CLSA, 9-Jun-2025 — "MISC, TNB & CIMB most compelling" + Bumi Armada commentary — 607961581LinqAlpha.PDF
[11] Malaysia strategy (1Q25 results: outlook not as dire), CLSA, 9-Jun-2025 — consensus EPS cuts of -6.8% for MISC — 607961581LinqAlpha.PDF

## Citations

- [1] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [2] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [3] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [4] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [5] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [6] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [7] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [8] **607951336LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951336LinqAlpha.PDF>
- [9] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [10] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [11] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>

