KUALA LUMPUR (Aug 5): CIMB Investment Bank Bhd cut its target price for MISC Bhd to RM6.92 from RM7.57 with an unchanged "hold" call on the shipping firm's challenging near- and medium-term outlook.

In a note today, CIMB analyst Raymond Yap said MISC's opportunities to grow its offshore asset base was limited in the immediate future as only a few oil companies are interested to allocate money for capital expenditure.

"Meanwhile, crude and product tanker rates have collapsed in July, taking rates perilously close to their 2012–13 lows, on various demand-related factors. Meanwhile, the supply side will see a spike in deliveries in 4Q16 and in 2017. As such, we think that the oil tanker sector can only get worse," Yap said.

At 11:26am today, MISC shares gained eight sen or 1.1% to RM7.58 with some two million shares changing hands. At RM7.58, MISC has a market value of RM33.48 billion.

CIMB's note followed the announcement on MISC's second quarter financials.

Yesterday (Aug 4), MISC reported an 80% rise in net profit to RM1.35 billion for the second quarter ended June 30, 2016 (2QFY16) from a year earlier, mainly on a substantial gain from the acquisition of subsidiaries.

MISC said 1HFY16 net profit rose to RM1.92 billion from RM1.23 billion in the previous corresponding period.

Today, Yap said MISC's 1HFY16 core net profit of US$288 million (about RM1.16 billion) constituted 44% of CIMB's previous full-year estimate.

He said this suggested "that MISC's FY16 EPS may undershoot by about 10%."