MISC is reported to be poised for a potential $4bn newbuilding binge across multiple sectors, TradeWinds understands.
The Malaysian shipowner has guided that it plans to “ramp up capex”, according to accounts of a recent briefing given to analysts by chief executive Yee Yang Chien.
“MISC is gearing up to take on multiple new projects across petroleum involving more long-term shuttle tankers, newbuild LNG carriers and FPSO projects, including the $2bn Mero-3 in Brazil,” said UOB Kay Hian analyst Kong Ho Meng.
“The key takeaway is that bidding for contracts has started to heat up from a lull seen in the first half of 2019 across the various segments.”
According to Meng here is likely to be more long-term contracts for DP-rated shuttle tankers with tenures of five to 15 years secured in “the next few months”.
He said each shuttle tanker contract is estimated to involve capex of between $90 and $120m and boost its current fleet of four operational shuttle tankers and seven newbuilds.
The key takeaway is that bidding for contracts has started to heat up from a lull seen in the first half of 2019
UOB Kay Hian
MISC is also said to have indicated that new requirements for long-term LNG carrier newbuilds are emerging from non-Petronas clients in regions such as North America, Europe and Qatar, targeted for 2023-24 delivery.
In the offshore segment, Meng said MISC said it had an appetite for a mega FPSO project, a mid-sized FPSO and several small projects.
“MISC is interested in two FSO requirements in Qatar, Erawan/Ubon FPSOs in Thailand, and a mega FPSO in Brazil,” he said.
Brazil’s Mero-3 FPSO, with bid submission reportedly due by late December 2019, is described as a “significant project at 180,000bpd of crude production capacity”.
MISC is said to have identified several partners, i.e. Siemens for EPC works, Sembcorp Marine for yard conversion, and a local Brazilian partner.
“The eventual funding structure and project stakes are still unknown as MISC targets to deconsolidate the humongous debt (70-80% funding) to several equity partners,” Meng said.
“A key concern is whether MISC’s lack of FPSO international track record will impede its chances of securing the contract.”
However, Meng said a scarcity of “quality FPSO contenders worldwide”, and with heavyweights such as SBM Offshore, Modec and Yinson already reaching full capacities with large FPSOs in their books, Petrobras may opt to “diversify its pool of FPSO suppliers.”
“We now take a view that MISC is preparing for a new but much-needed growth phase, leading to potential multiple contract wins,” said Meng.
“The strategy to boost long-term mix is a positive in the cyclical shipping sector, and will support step-up in earnings and cash flow generation in the next four-to-five years.
“This sentiment may override near-term earnings volatility, and the low but stable dividend yield.”
