---
endpoint: analytics
pattern: Transport
status: done
latency_ms: 181747
conversation_id: 63c5e2bc-2af9-4acc-8bb3-5ea4191787de
citations: 10
created: 2026-05-31 22:16:29Z
---

# Is CLSA incrementally more positive/negative on MISC. If so, why?

**Yes — CLSA has turned incrementally MORE POSITIVE on MISC (MISC MK / Bursa: 3816).** The trajectory across CLSA's dedicated MISC notes and the monthly Malaysia strategy publications is a clear positive re-rating, anchored by a formal upgrade in February 2025 that has held through every Malaysia strategy update since.

## Rating trajectory

| Date | Note | Rating action | TP | Analyst |
|---|---|---|---|---|
| 25-Aug-2024 | MISC – HLD (Within estimates) | Downgrade **O-PF → HOLD** | RM8.25 (unchanged) | Abdul Hadi Manaf |
| 23-Feb-2025 | MISC – O-PF (Masked by provisions) | Upgrade **HOLD → OUTPERFORM** | RM8.25 (unchanged) | Abdul Hadi Manaf |
| Apr–Jun 2025 | Malaysia Strategy notes | **Reaffirmed O-PF top pick** | RM8.25 (unchanged) | Abdul Hadi Manaf |

The TP has been held at RM8.25 throughout, so the directional change is driven by valuation/share-price action and segment-mix call shifts, not by a fundamental forecast revision.

## Why CLSA turned more positive (Feb 2025 upgrade)

CLSA's 23-Feb-2025 note explicitly upgraded MISC from Hold to Outperform, with the SOTP-derived RM8.25 TP unchanged. Three drivers were cited:

1. **Valuation reset / share-price weakness.** "We upgrade MISC from Hold to Outperform on share price action (-6.2% YTD) and the company is now trading near a trough valuation of 9.6x or -1 std. below its average of 18.4x." [3]

2. **Segment-mix shift — petroleum looking stronger, LNG still positive on minimal fleet expansion, FPSO market vibrant.** "Moving into 2025, charter rates for gas vessels will likely remain stagnant with higher deliveries of LNG carriers (86 versus 65 in 2023)... That said, the silver lining is within petroleum shipping, with average tanker rates continuing to be positive supported by high tonne-mile demand from continuous vessel rerouting coupled with minimal fleet expansion. The FPSO market is still vibrant with 10 FPSO awards expected in 2025 (2026: 11) but we believe MISC will first prioritise the merger plan with Bumi Armada (currently still in the due diligence phase), before submitting new FPSO tender projects." [4]

3. **Lumpy 4Q24 hits viewed as one-off — clearing the runway for 2025.** MISC posted a headline loss of RM446.2m in 4Q24, but after adjusting for RM735.5m impairment provisions and RM241.1m receivable impairments, core profit came in at RM544.3m (-21% YoY/+64.8% QoQ), with FY24 core profit of RM2.1bn meeting 100.1% of CLSA's full-year estimate (84.3% of consensus). A final 12 sen dividend brought FY24 DPS to 36 sen (76% payout) [6]. CLSA characterised the provisions as "lumpy" — gas-segment impairments reflected the supply glut, and offshore turned red in 4Q24 on the Mero 3 FPSO delivery, but the petroleum division improved and heavy engineering recovered [5]. The post-write-down 2025CL outlook is for net profit +139.3% YoY [9].

## Context — why the Aug 2024 downgrade had happened

The Hold was a tactical de-rating on share-price action, not a thesis change. Per the 25-Aug-2024 note: "We make no changes to our TP or earnings estimates, but downgrade from O-PF to Hold on share price action. We think upside is limited as spot charter rates have tapered off from their peak, especially for LNG vessels, while MISC is yet to give clear visibility on its next project for the offshore division." [1] The note flagged 2H24 risk: "we think 2H24 performance will be softer with a weaker contribution from the offshore and LNG segments" — though petroleum was already cited as resilient on US/Brazil/Guyana long-haul exports, and Mero 3 first-oil was delayed 2–3 months by a Petrobras technical glitch [2][10]. The Feb 2025 upgrade effectively reverses that tactical de-rating once the share price corrected and the LNG-supply-glut narrative was already in the price.

## How positive is "more positive" — caveats from the strategy notes

Subsequent Malaysia strategy notes have kept MISC in the top-picks bucket but also flagged growing reservations:

- **June 2025 — still a top pick, but the most-loved-of-the-loved.** "MISC, TNB & CIMB the most compelling among our top picks." However: "Should MISC's acquisition of Bumi Armada be called off, we think the market will be relieved." [7] — i.e., the Bumi Armada deal is treated as an overhang, not an upside option.
- **Earnings momentum is fading.** As of 9 June 2025, consensus 2025 EPS for MISC had been cut -6.8% from Jan-2025 levels, one of the larger downward revisions across FBMKLCI constituents. CLSA flagged MISC alongside Gamuda (-11%), CelcomDigi (-9.7%) and IHH (-6.3%) as the names pulling FBMKLCI consensus EPS growth down to 5.1% (vs 9.0% at start-2025). [8]
- **Valuation case still intact.** In the Jun-2025 top-picks comp sheet, MISC is shown at 11.9x 2025 PE / 0.9x PB / 7.0x EV/EBITDA with a 6.3% dividend yield and 139.3% 2025 EPS growth (off the FY24 base), TP RM8.25 (+7% upside from RM7.70 share price). [9]

## Bottom line

CLSA's call on MISC is **incrementally more positive** vs. the Aug 2024 stance, driven by:
- A formal **HLD → O-PF upgrade in Feb 2025** on trough valuation (~9.6x EV/EBITDA, -1σ below mean) and segment-mix tailwinds (petroleum tanker tonne-mile demand, minimal LNG fleet expansion supporting carrier rates, vibrant FPSO market).
- **Lumpy 4Q24 provisions on the gas fleet treated as cleansing**, with 2025 reset to +139% net profit growth off a low FY24 base.
- **Re-affirmed in every Malaysia strategy note since** (Apr/May/Jun 2025), with the Jun 2025 note flagging MISC as "the most compelling" alongside TNB and CIMB.

Caveat: enthusiasm is partial — TP has not been raised, consensus EPS is being cut (-6.8% YTD), and the Bumi Armada merger is treated as a potential negative overhang rather than a positive catalyst.

---
**Sources**
[1] MISC – HLD (Within estimates) — CLSA (25 Aug 2024) — 607937237LinqAlpha.PDF
[2] MISC – HLD (Within estimates) — CLSA (25 Aug 2024) — 607937237LinqAlpha.PDF
[3] MISC – O-PF (Masked by provisions) — CLSA (23 Feb 2025) — 607951336LinqAlpha.PDF
[4] MISC – O-PF (Masked by provisions) — CLSA (23 Feb 2025) — 607951336LinqAlpha.PDF
[5] MISC – O-PF (Masked by provisions) — CLSA (23 Feb 2025) — 607951336LinqAlpha.PDF
[6] MISC – O-PF (Masked by provisions) — CLSA (23 Feb 2025) — 607951336LinqAlpha.PDF
[7] Malaysia strategy (1Q25 results: outlook not as dire) — CLSA (9 Jun 2025) — 607961581LinqAlpha.PDF
[8] Malaysia strategy (1Q25 results: outlook not as dire) — CLSA (9 Jun 2025) — 607961581LinqAlpha.PDF
[9] Malaysia strategy (1Q25 results: outlook not as dire) — CLSA (9 Jun 2025) — 607961581LinqAlpha.PDF
[10] MISC – HLD (Within estimates) — CLSA (25 Aug 2024) — 607937237LinqAlpha.PDF

## Citations

- [1] **607937237LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607937237LinqAlpha.PDF>
- [2] **607937237LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607937237LinqAlpha.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] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [8] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [9] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [10] **607937237LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607937237LinqAlpha.PDF>

