Very good evening, ladies and gentlemen. Thank you for joining MISC Berhad's first quarter financial year 2026 analyst briefing.

My name is Faizan from the Investor Relations team and I will be your MC for today's session. We're pleased to have with us today Encik Zahid Osman, President and Group CEO; Encik Raja Azlan Shah Raja Azwa, Chief Strategy and Sustainability Officer; Encik Afendy Ali, Chief Financial Officer; and Encik Adam Fazil, Head, Strategy and Investor Relations.

Before we begin, may I kindly draw your attention to the disclaimer statement in the presentation deck. Today's presentation may contain forward-looking statements relating to the group's future plans, expectations, and outlook.

Actual results may differ due to risks, uncertainties, and other factors beyond MISC's control. With that, I would now like to invite Encik Zahid Osman, our President and Group CEO, to deliver his opening remarks and share the key highlights for the quarter.

Encik Zahid.

Thanks, Faizan. Assalamu'alaikum, salam sejahtera, and a very good afternoon to everyone.

Thank you for making time to join our analyst briefing this afternoon for our quarter 1 2026 results. I will take you through in terms of our performance and some of the development that took place within the quarter, and then Afendy will take you through the financial performance in detail, and then Raja Azlan will conclude on the market environment and outlook, and then we will have a Q&A session.

Before I go to the highlights, I think let me just briefly mention to you about the status of our vessel that is affected by the current conflict in Middle East. I think in the recent Annual General Meeting, I highlighted that we still have vessel currently so-called been inside the Strait of Hormuz, and Alhamdulillah, so far, just to let two of our vessels, Miri Zamrud, the LNG vessels, as well as Eagle Verona, have safely exited the Strait of Hormuz, and they are either on the way to the discharge port or on the way to pick up another cargo outside the Strait of Hormuz.

What's remained is only one more vessels, which is Eagle Veracruz, and we are making every effort to take the vessel out safely. I think throughout this period the conflict started, our priorities remain unchanged.

First is about protecting the safety and well-being of our people, and second, ensuring their safe return home. I would like to recognize our crew both onshore and offshore, the one on board as well, for their professionalism, discipline, and resilient throughout this period.

I'm very happy to know that the crew on board they are certainly maintain their professionalism and dedication to ensure the safe operation of the vessels, and we from the office and the onshore team, we're doing everything possible to ensure that they get all the support that they need. Hopefully, we will be able to take the last vessel out from the Strait of Hormuz safely and she can move to her discharge port accordingly.

Let's talk about our quarter 1 financial performance. We had a strong quarter, and certainly, we are making a good start to 2026.

Despite the continued geopolitical development and market volatility, the group delivered a resilient operational and financial performance. Revenue increased by 15% year-on-year, our profit after tax improved by 18% year-on-year, and operating cash flow strengthened significantly, increased 78% year-on-year.

This performance was mainly driven by stronger contribution from the Petroleum segment supported by improved freight rates and higher earning days. I'm sure, later on, Afendy will take you through on some of the details, especially by segment.

On the overall impact to the business with regards to the current conflict in Middle East or the closure or the restriction on the Strait of Hormuz, the impact is manageable. I think, and we are able to still deliver this kind of performance in quarter 1 2026.

It reflects the resilient of our business model, our earning exposure certainly remain limited. All our profitability, cash flow is supported by long-term charters with strong counterparties.

Additional operating costs, including insurance, war risk premiums, are generally recoverable from the contracts. Reflecting our confidence in the strength of the business and sustainability of our cash generation, the board declared a first interim dividend of 8 cents per share, consistent as the same quarter in 2025.

This reflect the sustainability of our cash generation and business model and our continued confidence in the resilient of the business that enable reinvestment for growth and commitments towards delivering shareholders' return. Talking about shareholders' return, our total shareholder return, or TSR, remains strong.

As at 9th May 2026, we delivered 17% TSR over the past 12 months period. Can I have the next slide, please?

Building on the momentum established in 2025, we continued delivering measurable progress across the three strategic pillars under our MISC 2030 ambitions. Under our Resilient Core, we remain focused on strengthening earnings visibility, improving portfolio resilience through disciplined execution, and expanding growth through contracted cash flow.

During the quarter, under asset deliveries, one LNG carrier was successfully delivered to QatarEnergy under the consortium partnership arrangement. This certainly strengthened our long-term earning visibility for our gas segment.

Next is on our growth milestones. In Gas, we secured long-term charter contract with PETRONAS LNG for five LNG carriers, and not too long ago, around April, we also received a letter of award from PETRONAS Gas Berhad for a new floating storage and regasification unit, or FSRU.

In the Offshore business, we entered into a long-term bareboat and charter and O&M arrangement with ExxonMobil for a new FSO in Papua New Guinea. In Heavy Engineering, our subsidiary MHB secured EPC contract with PTTEP for a marginal field development platform project.

On existing contracts, we have secured contract extension for FPSO Ruby II with PetroVietnam, and collectively, all this business success, new contract that we have secured during quarter 1 this year will strengthen the quality of our portfolio, improve earning visibility, and reinforce our future cash flow resilience. Under our transformative new energy pillar, we continue progressing our entry into selected emerging energy value chain with disciplined and commercial focus.

I think during the quarter, we secured a long-term charter for liquefied CO2 carrier for the Northern Lights project together with our partner, K Line, and in the Petroleum business, we secured a long-term charter for one dual-fuel, ethanol-ready shuttle tanker equipped with electric energy storage system. These are measured steps, building future-ready capabilities while maintaining capital discipline and long-term earning visibility.

On decarbonization, I am pleased to share that our greenhouse gas emission intensity was 8% lower year-on-year compared to the corresponding period last year. This reflects our continued progress through fleet modernization, operational efficiency improvement, and discipline in our operational execution.

Overall, the quarter reflects continued discipline in execution across the business. We strengthen our resilient core business, will generate secured and recurring cash flow, we advance selective future growth opportunities, and we continue to position MISC to remain competitive in a changing energy landscape.

With our new sustainability strategy for 2026 to 2030 period, which is anchored on the 3Is, Impact, Inclusion, and Integrity, we in MISC remain committed to delivering sustainable and responsible growth. Next slide.

Our continued focus on operational excellence, industry leadership, and disciplined execution continue to receive positive recognition during the quarter. I am pleased to share that MISC received the Industry Excellence Award under the Transportation and Logistics category and was also recognized under the Malaysian's Top 20 Overall Excellence Award.

It is certainly an improvement from the previous year. In addition, the group received an exceptional award for marine services at the Prime Minister's Hibiscus Award 2024 and 2025 period, reflecting our continued commitment towards sustainability, operational excellence, and responsible business practices.

These recognitions reflect the dedication of our people and reinforce stakeholders' confidence in MISC's ability to deliver safe, reliable, and sustainable performance. In closing, we entered 2026 with a strong momentum across the group.

A strong quarter 1 performance delivered, it reflects a resilient execution despite continued market uncertainty and geopolitical development. Our focus for 2026 remain clear: to strengthen our resilient core business, advancing selective new energy opportunities, and position the group for long-term sustainable growth and shareholder value creation.

With that, I will now hand over to Afendy and Raja Azlan to take you through the financial performance and market environment in greater details. Thank you.

Thank you, Encik Zahid. Assalamu'alaikum and very good evening, ladies and gentlemen.

Thank you for joining us today. Let me begin with the sharing of MISC Group performance for the first quarter of 2026.

Overall, the group delivered a resilient first quarter anchored by strong contributions from the Petroleum segment with robust cash generation and a marked rebound in profitability from the preceding quarter. Our group revenue stood at USD 729 million, recording a growth of 15% year-on-year and 8% quarter-on-quarter driven by stronger petroleum freight rates and higher earning days.

Tanker rates surged in March following disruption to the Strait of Hormuz, taking rates notably for VLCC and the mid-sized tankers. This rate strength was further amplified by the higher spot trading in Q1 2026, positioning the fleet to capture the upside of the favorable market condition.

Group operating profit of USD 193 million remained stable year-on-year as the strong petroleum uplift was offset by softer gas contributions, operational shutdown of FPSO Kikeh in the Offshore segment, and the absence of the gain on unwinding of interest rate swap recognized in Q1 2025. Against the preceding quarter, operating profit rose by 55% driven by the non-recurrence of one-off items in Q4 2025.

Profit after tax recorded at USD 189 million, marking a strong rebound from USD 5 million in Q4 2025 and 18% higher year-on-year. The uplift was supported by the gain on disposals of vessels, partially offset by the absence of the gain on acquisition of FPSO Kikeh recognized in Q1 2025.

The quarter-on-quarter recovery was anchored by the stronger operating profit, higher gains on vessel disposals, and lower vessels impairments. Our group also delivered cash flow from operation of USD 310 million in Q1 2026, reflecting a strong USD 136 million uplift year-on-year from USD 174 million in Q1 2025.

The growth was primarily driven by stronger collections in the Petroleum segment, reflecting the segment's robust revenue performance and the strength of its operational cash generations. Against the preceding quarter, the cash flow from operation moderated by USD 143 million from USD 453 million in Q4 2025, reflecting higher vessel operating costs in the Petroleum segment in line with the spot trading to capture the favorable market condition, as well as the non-recurrence of insurance recovery received in Q4 2025 in our Offshore segment relating to FSO Bunga Kertas.

Overall, operating cash flow generation remains robust, underpinned by disciplined working capital and resilient operating performances across our core segments. Next slide, please.

The group balance sheet remains stable and resilient, underpinned by prudent risk management and a strong liquidity profile. Total assets stood at USD 13.5 billion as at March 2026, up by close to USD 400 million from December 2025, primarily driven by stronger cash position.

Our gross gearing edged up to 0.4x from 0.37x in December 2025, reflecting higher drawdown of loans during the quarter, while the net gearing improved to 0.19x from 0.2x, underpinned by our strong cash position and a testament of the group discipline liquidity management. In terms of debt composition, our mix shifted modestly to 87% fixed and 13% floating as at March 2026 from 94% fixed and 6% floating in December 2025, following higher drawdown of floating-rate facilities during the quarter.

Overall, our gearing ratios remain well within the prudent threshold, liquidity remains healthy, and the group is well positioned to support ongoing capital commitments and other growth initiatives while preserving balance sheet strength. Next.

Consistent with the previous slide, the group ended the quarter with a healthy cash and stable debt position, reinforcing our financial resilience and capacity to support strategic growth. The group cash balance strengthened to USD 1.8 billion as at March 2026, up from USD 1.5 billion as at December 2025.

This close to $300 million uplift was supported by stronger net cash generated from operations alongside the net drawdown of borrowings, partially offset by capital expenditure payments during the quarter. Total borrowings stood at USD 3.4 billion as at March 2026, modestly higher by USD 239 million from USD 3.2 billion as at December 2025, as additional drawdowns were undertaken to support operational requirements, outweighing the scheduled repayments during the quarter.

Overall, capital structure remains disciplined and well-positioned, with our liquidity headroom comfortably preserved to fund ongoing capital commitment, sustain shareholders' return, and capture strategic opportunities across our core business segment. Let me now walk you through the overview of each of the business segment, starting with Gas.

Gas recorded revenue of USD 99 million in Q1 2026, broadly comparable against the preceding quarter, but 31% lower than the first quarter of 2025. The year-on-year decline reflects the segment's ongoing fleet rejuvenation transition as we progressively phased out aging steam turbine vessels in favor of modern and more efficient fleet anchored by long-term charters, which resulted in lower earning days arising from contract expiries, vessel disposals, and lay-ups.

The movement was further shaped by the absence of construction revenue from an FSU conversion following the project completion in Q3 2025 alongside lower charter rates. Notwithstanding this transition, this segment maintained a 100% firm-to-spot ratio, underscoring sustained earnings stability and the resilience of our long-term contracted income basis.

Despite revenue being comparable quarter-on-quarter, operating profit rose to USD 54 million, supported by the non-recurrence of one-off item in Q4 2025, namely the inventory write-off and the onerous contract provision. Against Q1 2025, operating profit was USD 14 million lower, reflecting reduced revenue contribution, partially cushioned by lower vessel operating costs on lay-ups and disposals, lower depreciation following 2025 impairment, and the absence of an FSU conversion construction cost.

The profit after tax of USD 33 million marked a strong turnaround from loss after tax of USD 96 million in Q4 2025, mainly driven by lower vessel impairment by USD 70 million, on which the preceding quarter impairment are largely related to Seri Balhaf and Seri Balquis. Against Q1 2025, profit after tax declined by $14 million in line with lower operating profit, partially offset by gain on vessel disposal, which moderated the higher recognition of vessel impairment in the current quarter.

Petroleum was the standout performer for this quarter, with revenue of USD 382 million, marking a 36% and 18% increase against corresponding quarter and preceding quarter, respectively, anchored by the surge in tanker rates and higher earning days. This segment continuously delivered resilient performance while maintaining a term-to-spot ratio of approximately 65:35, providing earnings stability and while positioning the fleet to capture upside from the favorable spot market conditions.

Operating profit of USD 109 million was higher by 31% year-on-year and 50 16% quarter-on-quarter, broadly in tandem with stronger revenue, partially offset by higher vessel operating cost as the spot trading rose, and the non-recurrence of gain on unwinding of interest rate swap recognized in Q1 2025. Profit after tax was further uplifted by the gain on this vessel disposal, which has benefited the current quarter, and subsequently delivering an uplift of 93% against Q1 2025 and 59% against Q4 2025.

Our Offshore segment, the revenue for the first quarter of 2026 stood at USD 107 million, down by 7% year-on-year and 9% quarter-on-quarter, reflecting the non-recurrence of reimbursable revenue for FPSO Kikeh, recognized in Q1 2025, and the absence of maintenance bonus recorded in Q4 2025. Operating profit of USD 49 million was 16% lower year-on-year, primarily due to the operational shutdown of FPSO Kikeh, which I mentioned earlier, since Q4 last year.

However, against the preceding quarter, the operating profit was USD 6 million higher, driven by the non-recurrence of doubtful debt provision of MOPU receivables in Q4 2025, partially offset by the absence of insurance recovery of FSO Bunga Kertas. Profit after tax of USD 9 million was USD 28 million lower year-on-year, reflecting the lower operating profit and the absence of the gain on acquisition of FPSO Kikeh recognized in Q1 2025.

Against Q4 2025, profit after tax was broadly in line with the higher operating profit. Overall, FPSO Marechal Duque de Caxias, or Mero 3, remained a key contributor to segment earnings, underpinned by production above nameplate capacity, lower operational downtime, and improved charter revenue.

Our Heavy Engineering segment revenue of USD 132 million in current quarter was 30% higher, driven by the advancements of construction activities, partially offset by lower contributions from post-delivery projects. Against Q4 2025, revenue moderated by 5%, reflecting lower marine sub-segment activities and tapering of projects approaching tail end.

Operating profit was broadly comparable against Q1 2025, but 60 62% lower against Q4 2025, mainly due to reduced contribution from marine segment and favorable project close-out that uplifted margins in the preceding quarter. Profit after tax also moved in line with operating profit, remaining broadly stable year-on-year and lower quarter-on-quarter.

That concludes my sharing of the group financial performance. I will now hand the floor to Raja Azlan for the presentation on market environment.

Thank you, Afendy, for walking us through financial performance. I will now take us through the market environment.

In early March, as you all know, the escalation of the Middle East war led to a closure and disruptions of the Straits of Hormuz. This is a critical global choke point carrying about 20% of oil and gas supply.

A large portion of these volumes are headed into Asia, 80% of the flows from the region are Asia-bound, particularly to China and Japan, as well as South Korea. When the strait was closed, this led to an immediate supply shock, with oil and gas prices spiking sharply.

Key Asian buyers moved quickly to secure cargoes and drew down strategic reserves. They also replaced the disrupted volumes with oil from the US, Russia, and West Africa, and LNG from the US and Australia.

Currently now, we are seeing oil and gas flows resume and rerouting taking place, which has helped ease the immediate pressure. Overall, the market has moved from an initial shock phase to a more manageable but still uncertain environment.

On the LNG front, global demand growth in 2026 is expected to be muted due to the elevated LNG prices driven by the supply disruptions amid the geopolitical tensions in the Middle East. At the same time, global LNG supply growth is also expected to slow, with several large-scale projects, including the QatarEnergy North Field expansion, having been deferred to next year.

Although near-term supply growth will be constrained by the ongoing geopolitical disruptions, global liquefaction capacity is still projected to expand at an estimated 11% CAGR through to 2031. This will be primarily supported by new capacity additions mainly from the USA, alongside emerging exporters such as Canada and Argentina.

However, prevailing uncertainties could continue to impact project development timelines. As supply-demand conditions are expected to improve from 2027 onwards, LNG trade is expected to regain momentum, with LNG prices likely to ease from 2028 to 2029.

Shifting towards the LNG carrier market, fleet expansion, vessel replacement, and evolving regulatory requirements continue to shape industry dynamics. In the first quarter of 2026, the LNGC market is supported by a healthy orderbook-to-fleet ratio, which is rising slightly to 41%.

In 2025, it was about 40%, following a recovery in new orders. New orders in 2026 are expected to be concentrated on modern and fuel-efficient LNG carriers, as owners continue to future-proof their fleets amid ongoing regulatory uncertainty.

Vessel deliveries are expected to remain high through 2025 to 2031, with the global LNGC fleet projected to grow at a CAGR of 7%. At the same time, we see scrapping of older steam turbine LNGCs has accelerated, as these vessels have become structurally uncompetitive due to poor fuel efficiency and increasingly stringent emission requirements, which have significantly impacted their charter demand.

While the disruptions in the Strait of Hormuz could result in delivery slippage, it is not expected to have any material near-term impact on LNGC fleet development. For MISC, there is currently no material impact on project execution or delivery timelines across our project portfolio.

All newbuild LNGCs scheduled for delivery in 2026 remain on track, and we will continue to actively engage shipyards and stakeholders to monitor the progress and mitigate any emerging risks. Next slide, please.

Moving on to LNGC charter rates, spot rates increased sharply in March 2026, particularly for modern vessels, driven by the heightened geopolitical tensions in the Middle East. The spot charter rates moderated in April 2026, with the long-term charter rates strengthening towards the month end.

Shifts in the LNG trade flows, particularly increased Atlantic to Asia shipments, helped to offset the loss of ton-mile demand arising from the disruptions in the Strait of Hormuz, while providing underlying support to charter rates. Looking ahead, LNGC charter rates are expected to remain elevated in 2026 compared with pre-Middle East conflict levels, particularly for modern vessels.

In contrast, steam turbine vessels are expected to continue facing challenges as the industry continues its shift towards more efficient and lower-emission vessels. Against this backdrop, we remain focused in executing our resilient core strategy by rejuvenating our fleet with modern, fuel-efficient vessels secured with long-term charters.

By 2030, our Gas segment is expected to deliver an additional 19 new modern and efficient vessels, which will lift the proportion of next-generation vessels in our fleet to approximately 80% from the current 45% level. Turning to the petroleum shipping, strong vessel ordering activity combined with limited scrapping continues to support fleet growth outlook for 2026.

In the first quarter of 2026, the crude tanker orderbook expanded further, driven by robust new orders. This lifted the orderbook-to-fleet ratio to 23%, up from 18% in 2025.

Fleet additions have started accelerating, with 27 vessels delivered in the first quarter of '26, compared with 33 vessels delivered in the entirety of 2025. A further 63 vessels are scheduled for delivery over the remainder of 2026.

Demolition activity remained low in the first quarter of 2026, with just three vessels scrapped. A further 12 vessels are expected to be scrapped over the remainder of the year.

Looking further ahead, approximately 600 new crude tankers are expected to be delivered between 2026 and 2031, with approximately 450 demolitions. Deliveries are expected to accelerate and peak in 2027 to 2028, as the bulk of the Suezmax and VLCC orders placed over the past 2 to 3 years enter the fleet.

Global oil markets are expected to remain volatile in 2026. Demand is projected to soften, particularly in Asia, as high prices and supply shortages weigh on outlook.

At the same time, global supply is also forecast to decline, driven by a sharp drop in Middle Eastern production. Amid heightened geopolitical tensions in the Middle East, petroleum shipping spot charter rates surged in March 2026.

While rates have eased gradually, they remain elevated year-on-year, supported by long-haul US to Asia trade flows. The crude tanker market is expected to remain broadly stable throughout the year, supported by sustained ton-mile demand arising from shifting global oil trade flows.

However, market uncertainty remains elevated, with charter rate trajectories dependent on the duration and evolution of the disruption of the Straits of Hormuz. Our Petroleum and Product segment continues to demonstrate resilience, supported by a solid base of secured and recurring income, complemented by proactive fleet deployment to maximize earnings and profitability.

In parallel, we are rejuvenating our petroleum fleet with five dual-fuel newbuilds in the pipeline to be delivered by 2028 to 2029. Moving to Offshore, upstream capex spendings expected to grow steadily, reaching $218 billion by 2030, surpassing the level seen in the mid-2010s.

This reflects a positive industry outlook, underpinned by rising energy demand and continued investments in offshore developments. Demand for floating production systems, particularly for FPSOs, is expected to remain strong.

Around 12 FPSOs projects are expected to be awarded in 2026. The estimated total capex for FPSO units between 2026 and 2030 is close to $80 billion, of which approximately 90% of the new projects are concentrated in Latin America, Asia-Pac, as well as Africa.

MISC is well positioned to capitalize on this FPSO upcycle in these targeted regions while managing affordability and risk through strategic partnerships as well as balanced contract structures, be it L&O, BOT, or EPC and O&M. With that, I end my presentation, and thank you, and back to you, Faizan.

Thank you, Encik Zahid, Encik Afendy, and Encik Raja Azlan. We will now move into the question-and-answer session.

Ladies and gentlemen, we will now begin the Q&A session. For those who wish to ask a question, please use the raise hand function.

Once called upon, kindly state your name and organization before asking your questions. To keep the session interactive and allow a good flow of questions, we will take up to two questions from each participant in the first round.

Should you have any follow-up questions, please feel free to raise your hand again, and we will come back to you as we progress through the session. We will now take the first question.

First, we have a question from Hasmi. Please go ahead, Hasmi.

Hi, thanks, Faizan. Hi, thanks, everyone.

Thanks for the presentation. Hasmi here from CLSA.

I think just a couple of questions from my side. I'll start off just on the Petroleum segment.

May I know how much of the war-driven rally in terms of the tanker rates was recognized during the quarter? Because I was aware that because during the presentation also, you mentioned a big chunk of it was reflected in March.

I was just curious how much of that spike was realized by your spot exposure to the tanker rates. Just want to think how should we think about the momentum going into second quarter, whether this first quarter results will be just a one-off kind of strength or it will be stronger compared to first quarter for the second quarter?

Is that one question? Or you have a second question?

I think if helpful, I will just go into the LNG as well. My second question is on the LNG side.

For the LNG one, I saw in your industry newsletter also during March, even the spot rates for steam jumped quite huge, right, from I think $3,000 to $41,000. Did MISC manage to capture that rate?

Also in terms of the new delivery of vessels from QatarEnergy this year, how's the sort of progress and when can we expect sort of earnings contribution? That's all from me for now.

Thanks.

Okay. Thanks, Hasmi.

Let me just try to answer your first part of the question, which is related to petroleum, neat. I think if you recall, the market for petroleum in terms of charter rates has been quite bullish since around end of last year.

I think just to reflect the sentiment at that time, we've request to neat. Then when the conflict happened in the Strait of Hormuz, I think those sentiment continued and for a variety of reasons with regards to what do you call it?

The charterers is trying to secure tonnage to ensure adequate supply so that they can pick up at different location. I think for petroleum, I think if you recall from even from last year, we have seen this elevated charter rates because of the market situation.

That's the first part. For us, having that ability because of we do have some of our petroleum tankers are exposed to the spot market, I think that's allowed us to capture some of the upside.

I think that's the first part. On the LNG side, I don't think we have gained anything from the elevated rates on LNG tankers because majority of our LNG is on term charters.

The one that is not on term charters, they are currently being laid up because they are not competitive or not efficient in the spot market. I think that's how we see both segment of the business, Petroleum and LNG.

You had a question on the delivery of the vessels. We have seven deliveries slated for this year, another four in 2027, and then in terms of the five additional vessels that was signed with PETRONAS, those will be delivered in 2029, 2030.

Thank you. Thank you, guys.

I think just clarification on the first part of the question. Just try to understand in terms of timing of the spot sort of exposure that MISC has.

Just to clarify that spike for the crude tanker rates, has it already been reflected fully or will we see sort of the benefit of the elevated spike rates into second quarter as well? I think

based on what we have seen in term of the market projection, we do anticipate the current heightened rates will continue at least for the second quarter, but then it will be moderated for the second half of the year. This is mainly because I think all the players, the traders have factored in the impact of the current situation into the charter rates or even the oil price.

What we expect, or at least what the news has reported, the deal between the US and the Iran certainly provide a lot of calmness in the market, because the indication is that they are close to an agreement.

All right. Thank you.

That's all from me. I'll jump back to the queue.

Thanks.

Thank you, Hasmi. Next, we have a question from Raymond.

Go ahead, Raymond.

Hi. Evening.

My name is Raymond from CGS International. I have a couple of numbers questions for Afendy.

In terms of the Bursa report, I can see that there are proceeds from disposal of vessels amounting to RM515 million and gain on disposal of vessels amounting to RM155 million. Afendy, is it possible that you split for me these two numbers by LNG and by the Petroleum segment, please?

I also like to ask about the impairment of RM56 million. Is that entirely due to the LNG segment?

Which ships on the LNG segment? That's it.

Raymond, thanks for the question. While the team is trying to split the first part of the question, maybe you can answer the impairment first, Effendy.

I think your question is on the impairment, it's about $14 million. It's mainly the Seri A and Seri B classes, Raymond.

Right?

Okay. Okay.

Then

for the profit on the disposal, it's mainly relating to the disposal of the Eagle Varna, which is quarter 1 this year. We have, well, very minor small gain on disposal of our three LNG vessels, but primarily the gain on disposal is in respect of the Eagle Varna VLCC disposal.

Okay. You're talking about Eagle Vancouver, is it?

Eagle Varna.

Eagle Varna, okay. Yeah.

I think the trade press must have reported it wrongly then. It's Eagle Varna rather than Eagle Vancouver.

It was reported in the trade press that it was sold for $86.5 million. Would that be roughly accurate?

Approximately about that number. Correct.

Okay. How about those three LNG vessels that you scrapped?

Was reported that it was scrapped, the Puteri Delima Satu, Zamrud Satu, and Mutiara Satu?

Correct. Okay.

Was it scrapped for around $11 million each, okay. If the Eagle Varna was disposed for $86.5 million, can I take it that the remainder of the proceeds from disposal actually comes from the scrapping of the three LNG vessels?

You're

right. Sure.

Then one more question for Encik Zahid on the direction of the tanker freight rates. The tanker freight rates did extremely well in the immediate aftermath of the US attack on Iran.

Then subsequently, it has corrected significantly. I think the rate the spot rates as we as it stands as of end of last week is actually quite similar to the levels that we saw in January last year.

Sorry, in January this year. The pre-war situation has sort of reverted.

The the gains that we saw from the spike in the spot rates have evaporated so far. Now that the straight if the Strait of Hormuz is going to be reopened, I'd like to ask Encik Zahid whether he expects that the tanker rates will recover strongly because of the flow of oil coming out from the Middle East that could generate more demand for tanker shipping?

Raymond, I think at least our expectation at the moment, and that's what we have reflected in our projections so-called going forward, I think the market expected a deal to be done between the US and the Iran, and because of that, the Strait of Hormuz will be reopened. The question is that is there any condition going to be attached to the reopening of the Strait of Hormuz?

We do not know. I think that's number one.

The second item that worth to note is that at the moment the market have factored in all this about this additional flow of petroleum will come from that part of the world. Because of that, we do anticipate that in addition to higher demand or more demand for tankers, but there will be more supply coming into the market for the tankers side.

I think on balance, we do anticipate the rates will moderate and come down to close to before the conflict period, Raymond. At least that's what we believe now.

Okay. It has already come down to the level pre-war.

Basically you expect the rates to remain roughly at the same level or roughly on average, at the current level for the rest of the year.

That is correct. One of the things that I think worth to note is that the STS business in the Gulf of Mexico, I think it's relatively still very attractive.

This is because of a lot of suppliers is looking for alternative supply from the Middle East. There's a lot of production coming out from the US.

Because of that, there's a lot of demand for the STS services.

Okay.

That's certainly good for us as well.

This reverse lightering which you also do in addition to normal lightering. Right?

Absolutely.

That's correct.

Okay. Thanks, thanks.

Thank you.

Thank you, Raymond. Next, we have a question from Jeremy.

Go ahead, Jeremy.

Hi, yeah. Good evening, everyone.

I have three questions, if you don't mind. The first one is regarding your downtime on FPSO Kikeh.

Was it scheduled or was it unplanned downtime? That's the first.

Second is I think yesterday PETRONAS, there was a news regarding your FPSO Sepat and there was a tragedy. Can you give us a bit more color to this and maybe tell us about how it happened and was it a third-party service provider?

Maybe the third one is I think you guys are embarking on a capex upcycle. You guys are building FSO PNG LNG, FPSO Kelidang, and FSRU for PetGas.

I think my question is, does MISC still have the appetite to bid for new large floating projects? Or you guys will be focused on the execution and delivery of the existing ones?

That's all from me.

Okay. Thanks, Jeremy, for the question.

Let me try to take them one by one. On the Kikeh downtime, this is related to the issue that we had since last year where we had an unexpected incident in the pump room.

Because of that, the whole facilities is currently down and we are doing the safety checks as well as integrity enhancement to the facility. It has been down since around October last year.

Okay? We do expect, based on current plan, that the whole upgrade or the rectification will take place in the second half of this year.

That's on Kikeh. On FPSO Sepat, it's not our FPSO.

The FPSO is belong to PETRONAS and it's a third-party operated FPSO. Very difficult for us to comment on that one.

We've also seen the unfortunate incident through the news. We certainly feel very sad to the victim, as well as to the family.

On capex, okay, this is very interesting question. We are currently having very heavy growth so-called mean activities, FPSO as well as shipping side, and including FSRU.

We still have appetite to grow, but our appetite will certainly take into account our affordability and our capacity to raise money through the financing. We are going to be selective, especially on the new energy opportunities, the one that is within our focus areas.

We are certainly want to look at it. For example, liquefied CO2 carrier.

We have won one, and we certainly want to grow in this aspect.

Okay. Thanks, because I think just now you showed slides that you guys are expecting an FPSO upcycle.

I was thinking maybe you guys will be embarking on that journey lah basically to add more FPSO into your fleet.

Yeah. We are certainly interested for further growth in FPSO, but we also mindful that we currently already have quite a number of FPSO in our execution stage.

We're going to be selective. That's what I'm saying.

Okay. Maybe one final one, just follow up.

I think long time ago, you guys were guiding for a partial stake sale of your Mero 3. Is that still happening or you guys have brushed this whole thing aside?

At the moment, we have not finalized anything, we continue to explore that opportunities mainly to basically recycle the capital that we have invested into that project so that we can invest into new FPSO asset. Discussion is still ongoing.

Okay. Thanks.

Sorry, I overstayed. Thanks.

Sure, no problem, Jeremy.

Thank you, Jeremy. Next, we have Raymond.

Go ahead, Raymond.

Thanks. I just wanted to follow up on the LCO2 because I think when you made the announcement to Bursa on the 30th of January, you had mentioned that a second LCO2 carrier time charter party was expected to be awarded in April.

We are already past that date. Is it still coming or is it no longer being considered?

It is still currently being considered by the charterer. They are still finalizing in terms of I think the capacity, what kind of size of vessel that they want.

Our discussion with the charterer, the Northern Lights, are still ongoing, Raymond. There has been some delay in that aspect.

Okay. In terms of the FSRU from Petronas Gas, Encik Zahid, can I ask roughly what kind of project IRR are you targeting over the 20-year time charter?

Raymond, right, we can't disclose that kind of commercially sensitive, but what I can say to you, it's certainly meeting our own so-called mean investment hurdle. That's number one.

Second, it's also allow us to enter for the first time into this very niche segment, floating storage and regas unit, Raymond.

Sure, thanks.

Thank you, Raymond. Next, we have Jeremy.

Go ahead, Jeremy.

Maybe just follow up on I think you guys admitted that you guys are going through a heavy capex upcycle. I think commodity prices are also on a significant uptrend at the moment because of the war.

Maybe some color on how you guys will mitigate cost overruns basically. That's all from me.

Jeremy, if you don't mind, can you just repeat the question? Because I can't make out especially the second part of the

Basically, there's a massive uptick in commodity prices. This will make your cost of building your floating assets, right, to be significantly higher as well.

My question is maybe some color on how you guys mitigate potential cost overruns for the three projects that you guys are embarking on.

For potential cost overrun. I think, there's a few of our current project is FPSO, especially the floaters, the Kelidang, the Papua New Guinea, that we have secured with the customer, they are just at the beginning of the execution stage.

There's a couple of things that we are doing. First, we are making sure that some of the supply chain risk that we are having with the contractors are addressed either on lump-sum basis or we are looking at very so-called mean stringent in terms of how we award contracts.

At the moment, the biggest impact that we have seen is on the fuel prices, especially for the project, but we are still not at that stage of this project that need to take into a lot of gas oil to the activities. Because we are still at early stage where we're doing the engineering and then so on, Jeremy.

We are aware that some of this cost impact will come in, but we are at the different cycle, the impact to us is at the moment is very minimal. Want to add something, Raja Azlan?

Please.

I think if the Middle East issue is contained to this year alone, there will be minimal impact. Of course, in the event of prolonged Middle East conflict, there could be some issue, but we also have got contingencies that can partially offset this, and we will certainly enter into discussions with our clients.

Based on whatever we have seen so far, we have notified our clients. At the moment, it is still not much impact in terms of the offshore and the yard-related activities lah.

In terms of the shipping side, most of the impacts will be passed through to the clients given the charter arrangements.

Thank you.

Thank you. Next, we have Raymond.

Go ahead, Raymond.

Thanks. I just wanted to double-confirm that those vessels that were stuck behind the straits, Eagle Verona, Veracruz, and the Mizzam, they are all on time charter.

I just wanted to double-check that during the period where they were stuck behind the straits, you could actually still collect your time charter hire and there's no impact on any revenue to be received from that. Also, I think was it you, Encik Zahid, or Encik Azlan, I think it was Encik Azlan who talked about the orderbooks, so that you don't expect any delay in the delivery orderbook, even though QatarEnergy has some negative impact on their facilities that require a couple of years to repair.

They may or may not need as many LNG vessels as they had planned. Just wanted to double-check that the newbuilding deliveries from the JV as well as your own orders with QatarEnergy, those will not be delayed and will still proceed as per original schedule?

For the first part, Raymond, the answer is yes, there's no impact on our charter revenue coming from the three vessels. All of them are on long-term charter.

On the second part, so far, there's no indication if there's any delay from the charterers.

Okay. You have sold the Eagle Varna, and that's about 13 years old.

You have another three VLCCs which are 13 years old, like Eagle Vancouver, Verona, and Versailles. Are those also eventually going to be sold?

No, at the moment, we don't have any concrete plan yet, but we certainly will continue to evaluate with regards to how best for us to maximize the value from this asset, either to continue to trade or on the second-hand market. Sure, a very attractive value that we can see.

Not just for these three vessels, but for all our assets certainly, especially when they have no long-term charter. Okay.

I see. When you sold the Eagle Varna in February, that was before the war, did you change your calculation after the war?

You intend to keep the other old VLCCs? Or was it anything to do with the war that you may not be selling those three?

I don't think whether because of war or not because of war. Our assessment is always based on what are the value that we can get from this asset.

If we continue to trade the asset for the remaining economic life versus if the customer is offering you upfront value for the asset. I think that's our major consideration, plus remember some of this asset will require dry docking where you need to spend capex and so on.

We take those into account all together. Whether it's a war or not, it may have minor impact on the value of the second-hand asset, but not so much on our calculation.

Thanks.

I'm mindful of the time, but we still have a few more people putting up their hands. Maybe we give to the one that still have not asked question, and plus I saw there's one online question, eh?

Please, Faizan.

Thank you, Encik Zahid. I think we will go next to Aimi.

Go ahead, Aimi.

Yes. Hello.

Can you hear me?

Go ahead, Aimi, we can hear you loud and clearly. Okay.

Aimi from AmBank. Just two questions from me.

This quarter, capex actually rose around RM200 million quarter-on-quarter to RM800 million. It's 40% higher and even higher year-on-year.

Should I expect this to be the quarterly run-rate for capex? That's one.

Oh

yeah. Aimi, capex, a lot of it are based on our gas vessels that will be delivered.

All the capex payments are according to the milestone of that we have agreed with the shipyards. You can't assume that the payments of quarter capex will be following the same trend of quarter 1.

It will be based on the milestone of those ships' completion, and as we have agreed with the shipyard earlier.

Do you foresee it to be higher year-on-year? If I remember, usually the capex will be around 2 billion to 2.2 billion, would it reach higher, maybe above 2.5?

I'm doing

very general. I'll try to answer that in general, Aimi.

I think we mentioned earlier that MISC is currently having a very so-called mean high level of growth or higher number of construction for new vessels. What Raja Azlan mentioned, in the next few years, we have what, 17 or 19 vessels that coming in, and so we do expect that the capex will continue to increase as per the delivery of this vessels.

In the past, if you look at in the last few years, the number of newbuilds that coming in are relatively lower. We do expect the capex to continue to go up, as what we already planned.

Yes.

Just to add, I think 2025, last year, was a bit quiet because we completed our Mero 3 project at the end of '24, our capex standpoint that were not as much. As mentioned by Encik Zahid, you can expect a bit more because we are taking some deliveries of the LNG vessels this year as well.

All right. Clear.

Then

my second question is, you expect 12 FPSO to be awarded this year, 2026. How many of this you are bidding, and then how much more you are able to take up for FPSO projects?

I think for the FPSO projects, certainly, you hear from the market, that's either in Brazil or in Africa, I think they will continue to put it for interested party. We are considering at least a couple of them, but we haven't made any decision whether we're going to bid or not, but the work is being done now to ensure that whether if we bid, can we be competitive and can we deliver it on time.

I think that's the normal process that we always go through when it comes to FPSO business. One thing to note about FPSO as well, when you bid, still will take another few months for detailed discussion if you are selected by the parties before the parties decided to award it to you.

We wouldn't know. If we bid this year, we may not get it, but we only know for next year

and so on. Okay.

Thank you. Jump back to the queue.

We're going to take one last question. All right.

We have a question online from Mei Ting. Let me read that.

"For LNG and Offshore segment, can management explain the improvement in profit after tax for both segment quarter-on-quarter despite a drop in revenue?"

Yep, I'll take that. Thanks for the question, Mei Ting.

For Gas segment, if you recall quarter 4 last year, we actually had a huge impairment on the vessels. As I mentioned earlier in my presentation, it's in relation to the two Seri Balhaf and Seri Balquis, they are very much a non-cash item.

Obviously, we don't have as much impact on the impairment on gas vessels this quarter, so that's explain for the Gas. For the Offshore segment, oh yeah, we actually had a one-off impairment on the MOPU receivables as well in quarter 4 last year, which we didn't have it here in quarter 1.

Those are the major explanation for the better performance of the two segments in quarter 1 versus quarter 4 last year.

Thank you, Encik Afendy. Ladies and gentlemen, this brings us to the end of today's analyst briefing.

On behalf of MISC Berhad, thank you for joining us this evening and for your continued interest in the group. A copy of today's presentation has been circulated to attendees and will also be made available on our corporate website.

To our sell-side analysts, we would really appreciate receiving a copy of your published research reports for the Investor Relations team's reference. Thank you once again, and we wish everyone a pleasant evening ahead.

Bye, everyone.

Thank you, everyone. Bye.

Thank you.

Bye.