KUALA LUMPUR: Kenanga Research has maintained its Underperform on Yinson
with a target price of RM2.31 based on CY15 EPS of 13.6 sen and unchanged PER of 17 times.
In a note on Tuesday, Kenanga said it liked Yinson for its long-term contracts and ambitious management, and believe that the market has priced-in at least 1-2 contract wins, which would contribute only from CY16.
"Moreover, the stock is now trading at a steep premium to its larger peer Bumi Armada, which trades at CY14-15 PER of 17.4-13.7 times tipping the risk-to-rewards balance towards more
risks as YINSON embarks on more global contracts," it said.
It added that market talk has it that Yinson is close to winning a large FPSO contract soon. This is within the previous guidance that it is bidding for at least three projects that could see some results in 2H15.
"We believe the market has factored this potential win, judging from the premium valuations of 20 times FY16 PER that the stock is trading at.
"Whilst we are positive on this; we highlight that any new project would only yield earnings by end FY16-17 (due to construction period of 18-24 months). Also we do not rule out cash calls should the new project be a huge one.
"There are plans to divest the non-oil and gas division, but this might only occur from next year onwards. We maintain our net profit forecasts for now pending the analyst briefing later today," it noted.
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