The Three Numbers That Laden MISC Berhad

When it was founded in 1968, it was known as Malaysia International Shipping Corporation Berhad. But today it is known by its four-letter acronym MISC Berhad (KLSE: KLSE: MISC; 3816.KL).

MISC, which is a subsidiary of Petronas, specialises in the movement of liquefied natural gas (LNG) through its fleet of more than 110 vessels. But despite its commanding maritime position, the company’s Return on Equity is far from impressive.

Last year, MISC’s Return on Equity was a pedestrian 7.3%. It meant that the shipping company generated MYR7.30 on every MYR100 of shareholder equity. By comparison, its fellow Petronas stable mates Petronas Chemicals Group (KLSE: PCHEM; 5183.KL) and Petronas Gas (KLSE: PETGAS; 6033.KL) delivered returns of 10.9% and 17.8%, respectively.

That said, MISC’s Net Income Margin is not disappointing, at all. The company, which also transports vegetable oils, recorded a Net Income Margin of 22.6%. In other words, it made a bottom-line profit of MYR22.60 on every MYR100 of revenues. By comparison, Singapore’s Neptune Orient Lines (SGX: N03) was 12.4% in the last 12 months.

MISC’s is not especially good at generating revenues from its assets. Its Asset Turnover is a lowly 0.25, which could be a reflection of the asset-heavy nature of its business. The market average is about double that at 0.5.

MISC does make use of borrowings. It had Total Liabilities of MYR11,070 and Total Assets of MYR47,539. That equates to a Leverage Ratio of 1.3, which is not especially high.

By unloading MISC’s Return on Equity, it is easy to see why it might be weighed down. Its RoE of 7.2% is the product of a high Net Income Margin of 22.6%; a lowly Asset Turnover of 0.25 and a small loading of leverage of 1.4.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.