Company Coverage
MISC (MISC MK): Entering A New Era Via Yinson Privatisation
BUY (Maintained)
Current price:
Target price:
Upside:
RM8.01
RM9.50
+12.0%
Analyst
Highlights
Having Yinson as a partner will add value to MISC. Although MISC appears to be taking on a lot of debt burden without being granted operational control, we opine this deal will be long-term positive for the MISC group, considering how Yinson had added value to its clients and collaborative partners in the past. For the FPSO business, it also grants MISC immediate access into the Africa region where MISC did not have previously. Similar to the satellite model adopted by Petronas and Eni through independently established JVs, we see scope for YP and MISC to apply a similar approach in potential markets such as Brazil, allowing them to combine resources without putting undue strain on their balance sheets.
Retain BUY and RM9.50 target price. For now, the incremental earnings is expected to be small at merely 1.4% of MISC’s 2027 earnings.
Analysis
Sweetened RM2.50/share cash buyout. The Yinson privatisation deal runs through a vehicle MY Offshore Holdings, in which MISC and the Lim family each hold 41.5% and Employees Provident Fund (EPF) retains 17.1%. This structure follows the details revealed during the preliminary exclusive negotiations with the consortium that started about two months ago. The price is 6.4% above the preliminary RM2.35/share offer floated on 28 Aug 26. Privatising Yinson Holdings (YNS) at RM2.50/share implies a firm value of RM7.3b (US$1.8b). The consortium plans to buy the remaining 1.6b shares for RM4.03b under a court-sanctioned scheme of arrangement. MISC’s portion amounts to RM3.03b, of which MISC envisage 75% debt funding.
We deem the implied valuation to be fair... According to MISC’s announcement and with reference to YNS’ 1HFY27 financials, the deal implies 8.7x EV/EBITDA and 1.4x P/B. The enterprise value (EV) includes RM16b in YNS’ group loans, RM3.3b in Redeemable Convertible Preference Shares (RCPS) and RM1.9b in perpetual securities. It is well within peer average EV/EBITDA multiples eg Bumi Armada (4x), BW Offshore (12x), and Modec (3x), and nearly a mirror image to SBM Offshore’s (7.8x EV/EBITDA; 1.5x P/B). We note that YNS’ historical EV/EBITDA trading range of 6-8x seems to be at a discount relative to other offshore peers that are valued closer to 10x. Using a PE comparison is not meaningful due to finance lease distortions.
Highlights
Having Yinson as a partner will add value to MISC. Although MISC appears to be taking on a lot of debt burden without being granted operational control, we opine this deal will be long-term positive for the MISC group, considering how Yinson had added value to its clients and collaborative partners in the past. For the FPSO business, it also grants MISC immediate access into the Africa region where MISC did not have previously. Similar to the satellite model adopted by Petronas and Eni through independently established JVs, we see scope for YP and MISC to apply a similar approach in potential markets such as Brazil, allowing them to combine resources without putting undue strain on their balance sheets.
Retain BUY and RM9.50 target price. For now, the incremental earnings is expected to be small at merely 1.4% of MISC’s 2027 earnings.
Analysis
Sweetened RM2.50/share cash buyout. The Yinson privatisation deal runs through a vehicle MY Offshore Holdings, in which MISC and the Lim family each hold 41.5% and Employees Provident Fund (EPF) retains 17.1%. This structure follows the details revealed during the preliminary exclusive negotiations with the consortium that started about two months ago. The price is 6.4% above the preliminary RM2.35/share offer floated on 28 Aug 26. Privatising Yinson Holdings (YNS) at RM2.50/share implies a firm value of RM7.3b (US$1.8b). The consortium plans to buy the remaining 1.6b shares for RM4.03b under a court-sanctioned scheme of arrangement. MISC’s portion amounts to RM3.03b, of which MISC envisage 75% debt funding.
We deem the implied valuation to be fair... According to MISC’s announcement and with reference to YNS’ 1HFY27 financials, the deal implies 8.7x EV/EBITDA and 1.4x P/B. The enterprise value (EV) includes RM16b in YNS’ group loans, RM3.3b in Redeemable Convertible Preference Shares (RCPS) and RM1.9b in perpetual securities. It is well within peer average EV/EBITDA multiples eg Bumi Armada (4x), BW Offshore (12x), and Modec (3x), and nearly a mirror image to SBM Offshore’s (7.8x EV/EBITDA; 1.5x P/B). We note that YNS’ historical EV/EBITDA trading range of 6-8x seems to be at a discount relative to other offshore peers that are valued closer to 10x. Using a PE comparison is not meaningful due to finance lease distortions.
BUY (Maintained)
Current price:
Target price:
Upside:
RM8.01
RM9.50
+12.0%
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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