Monday, Mar 01, 2004
The reaffirmation of the ratings reflects Malaysia International Shipping Corporation Berhad’s (MISC) solid operating fundamentals, in particular the Liquefied Natural Gas (LNG) shipping segment. Other supporting factors include MISC’s strategic position in the Malaysian shipping industry; its sound financial policy; exceptional financial flexibility; and the strong support of its majority shareholder, Petroliam Nasional Berhad (PETRONAS).
With a diversified fleet of 154 vessels and a combined tonnage of approximately 8.4 million deadweight tonnes, MISC is the dominant shipping and logistics services provider in Malaysia. MISC also has the distinction of being the largest single owner/operator of LNG tankers in the world with a fleet of 16 tankers as at 31 December 2003 with a further 5 tankers to be delivered progressively between January 2004 and March 2006. As the sole transporter of LNG from Malaysia (the world’s third largest LNG exporter), MISC is in a favourable position to benefit from the growing demand for LNG transportation.
On 22 July 2003, MISC completed the acquisition of American Eagle Tankers Inc. Ltd. (AET), a subsidiary of Singapore-based Neptune Orient Lines Ltd for USD445.0 million. The AET acquisition will put MISC in the position of having the second largest owner-operated Aframax fleet in the world which extends MISC’s market reach to the Atlantic Basin complementing MISC’s existing presence in Europe, Mediterranean, Arabian Gulf and the Far East. Going forward, concentrated efforts are being made to strengthen MISC’s position in the energy-based transportation sector.
For the nine months ended 31 December 2003, the group’s pre-tax profit was RM1.6 billion (FYE2003: RM1.3 billion) on the back of RM5.3 billion (FYE2003: RM5.4 billion) in revenue. The better performance was driven by higher contributions from all shipping segments mainly due to higher freight rates and improved operating efficiency. The inclusion of the operating results of American Eagle Tankers Inc., Ltd. (AET) also contributed significantly to the group’s performance.
The prospects of the shipping industry remain positive. Continued improvement in trading volume and freight rates in liner, bulk and petroleum businesses resulting from the recovery of the global economy would contribute to the strong performance for the current year.
The group’s strong cash flow position strengthened further over the last three years, underpinned by the relatively stable charter revenue stream from the LNG business. The balance sheet shows ample liquidity and the group’s cash flow protection measures are capable of accommodating a reasonable degree of earnings volatility in the non-LNG shipping business.
MISC’s strong internal cash generation has reduced the need for excessive external financing to fund its capital expenditure program. MISC’s debt leverage is considered low by shipping industry norms. Its gearing level increased to 0.88 times (FYE2003: 0.44) as at 31 December 2003 after taking into account the bridging loan facility which was taken to fund the AET acquisition.
MISC enjoys exceptional financial flexibility, in the light of its substantial cash balance, its 62.44% ownership by national oil company, PETRONAS, and superior access to capital markets. US Dollar denominated shipping revenues provide a natural hedge against exchange rate volatility in relation to the group’s sizeable foreign currency debt obligations. The group’s short-term debt exposure represents 56% of its total debt as at 31 December 2003.
With a diversified fleet of 154 vessels and a combined tonnage of approximately 8.4 million deadweight tonnes, MISC is the dominant shipping and logistics services provider in Malaysia. MISC also has the distinction of being the largest single owner/operator of LNG tankers in the world with a fleet of 16 tankers as at 31 December 2003 with a further 5 tankers to be delivered progressively between January 2004 and March 2006. As the sole transporter of LNG from Malaysia (the world’s third largest LNG exporter), MISC is in a favourable position to benefit from the growing demand for LNG transportation.
On 22 July 2003, MISC completed the acquisition of American Eagle Tankers Inc. Ltd. (AET), a subsidiary of Singapore-based Neptune Orient Lines Ltd for USD445.0 million. The AET acquisition will put MISC in the position of having the second largest owner-operated Aframax fleet in the world which extends MISC’s market reach to the Atlantic Basin complementing MISC’s existing presence in Europe, Mediterranean, Arabian Gulf and the Far East. Going forward, concentrated efforts are being made to strengthen MISC’s position in the energy-based transportation sector.
For the nine months ended 31 December 2003, the group’s pre-tax profit was RM1.6 billion (FYE2003: RM1.3 billion) on the back of RM5.3 billion (FYE2003: RM5.4 billion) in revenue. The better performance was driven by higher contributions from all shipping segments mainly due to higher freight rates and improved operating efficiency. The inclusion of the operating results of American Eagle Tankers Inc., Ltd. (AET) also contributed significantly to the group’s performance.
The prospects of the shipping industry remain positive. Continued improvement in trading volume and freight rates in liner, bulk and petroleum businesses resulting from the recovery of the global economy would contribute to the strong performance for the current year.
The group’s strong cash flow position strengthened further over the last three years, underpinned by the relatively stable charter revenue stream from the LNG business. The balance sheet shows ample liquidity and the group’s cash flow protection measures are capable of accommodating a reasonable degree of earnings volatility in the non-LNG shipping business.
MISC’s strong internal cash generation has reduced the need for excessive external financing to fund its capital expenditure program. MISC’s debt leverage is considered low by shipping industry norms. Its gearing level increased to 0.88 times (FYE2003: 0.44) as at 31 December 2003 after taking into account the bridging loan facility which was taken to fund the AET acquisition.
MISC enjoys exceptional financial flexibility, in the light of its substantial cash balance, its 62.44% ownership by national oil company, PETRONAS, and superior access to capital markets. US Dollar denominated shipping revenues provide a natural hedge against exchange rate volatility in relation to the group’s sizeable foreign currency debt obligations. The group’s short-term debt exposure represents 56% of its total debt as at 31 December 2003.