Kuala Lumpur: MISC Berhad has posted second quarter results almost 11% up on the corresponding period last year, leading the chairman to reportedly reveal the group now has as much as $5.5bn worth of new vessels on order, predominantly gas and oil tankers. The moves follow the first ever sale and leaseback deals concluded by subsidiary American Eagle Tankers (AET) earlier this month, designed to free up resources for more newbuildings.
For the three months ended September 30, the Group recorded a pre-tax profit of RM696.7m, up 10.9% on the RM628.4m of Q2 FY 2005/6. Turnover was 10% ahead at RM2.53bn. The improvement was attributed to better rates in the energy business and improved profitability in Heavy Engineering.
Separately, the local press reported MISC chairman Tan Sri Dato Sri Mohd Hassan Marican as saying the group had now committed to around $5.5bn worth of newbuilds delivering through 2010, including seven LNG carriers, eight chemical tankers, a large containership and a total of eights VLCC and aframax tankers for AET.
Certainly AET is set on an aggressive expansion plan designed to snaffle up new tonnage while the going is good. In mid November it concluded the sale of four aframax tankers to shipping funds administered by Norwegian investment bank ABG Sundal Collier, which immediately leased them back on a seven-year bareboat charter, raising more than $165m. In addition, a three-year, $20m sale and leaseback deal was lined up for another vessel with Polar Marine SA of Greece.
Explaining the deals, AET ceo Amir Hamzah Azizan, said: "Whilst the asset price of our vessels remains high, it makes perfect sense for us to realise some of that capital through sale and lease-back arrangements such as these... (which) allows us to continue operating these tankers whilst re-investing the capital released in newer tonnage".
He added: "Our overarching strategy is to continue to grow our fleet and renew our vessels regularly as demonstrated by our recent order placed with Tsuneishi Corporation for up to four new aframax vessels to be delivered in 2009 and 2010." Previously the company had four VLCCs and two aframaxes on order. It remains to be seen if rates will hold up enough to amortise these expensive vessels. [28/11/06]
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