MISC: A Transformation in Progress, Returns Yet to Follow

Between 2019 and 2024, MISC Berhad transitioned from a conventional energy shipping company into a forward-looking provider of sustainable maritime and energy solutions. This transformation was shaped by decarbonisation trends, the energy transition, and a strategic push toward innovation.

A key milestone was the successful commissioning of the FPSO Marechal Duque de Caxias in Brazil, with the Offshore Business contributing about 12% of Group revenue in 2024.

Despite these strategic shifts - global expansion, entry into deepwater markets, and fleet modernisation - financial returns have yet to show meaningful improvement.

ROE in 2024 stood at 3.2%, below the 4.0% recorded in 2019, despite a brief rebound during 2022–2023. This reflects a transitional earnings phase, as capital-intensive projects like FPSOs and low-emission tankers are only beginning to contribute materially to earnings.

Legacy challenges, especially in Marine & Heavy Engineering, and a large equity base have also suppressed ROE. As a result, MISC currently maps into the Quicksand quadrant in the Fundamental Mapper—where strategic intent is clear, but financial outcomes lag.

However, this should not be mistaken for a failed transformation. With new assets now operational and legacy drag expected to ease, MISC is well-positioned to improve its returns - though the market has yet to fully price in this potential.

In the context of the Fundamental Mapper, MISC could move out of its current position in the Quicksand quadrant once improving returns begin to materialise. The recent decline in its share price suggests that the market has not yet recognised this trajectory.