Yinson's Lam Son floating production, storage and offloading vessel.
KUALA LUMPUR: Maybank Investment Bank Research expect Yinson Holdings
’ 9MFY1/18 results, due this month, to yield minimal surprises.
It said on Tuesday that on-quarter earnings are expected to be weaker due to lower associate contributions.
“We remain positive over Yinson’s business direction & prospects, earnings growth and steady cashflow strength.
“Our sum-of-parts based target price (TP RM4.45) which offers a 16% upside, has upside bias, for it has yet to include potential earnings/NPV positives from FPSO Lam Son and Layang,” it said.
Maybank Research expects Yinson to report a core net profit of RM90mil to RM95mil in 3QFY1/18 (-14%-19% on-quarter).
This would bring 9MFY1/18 core earnings to RM271mil to RM276mil (+74%-77% on-year), accounting for 72%-74% of its FY estimate, in line with its but ahead of consensus’ RM307mil.
The anticipated on-quarter weakness would mainly be due to: (i) the absence of 49%-owned FPSO Lam Son’s profit contribution (i.e. charter was terminated effective July 1, 2017) and (ii) lower earnings from FSO Bien Dong.
This is expected to be partially placated by the full three-month earnings contribution from 100%-owned FPSO JAK, which we estimate to make up 48%-50% of group’s 3QFY1/18 net profit.
“Three outstanding issues to be addressed. Firstly, we expect the details of the FPSO Layang job, novated by THHE to be made known by end-Dec 2017. At the same time, we too expect Yinson to announce the LOA on FPSO Lam Son by this month.
“Finally, the sale of the earlier agreed 26% stake at FPSO JAK to a Japanese consortium for US$117m is expected to be finalised by 1QCY18. Note that while the earnings impact from the FPSOs Layang and Lam Son contracts have yet to be factored into our earnings model, the lower stake effect of FPSO JAK has been incorporated.
“A growth stock with improving visibility. The tender pipeline for FPSOs worldwide remain strong. Apart from FPSO Layang, Yinson remains engaged in several firm biddings. Yinson’s valuations are undemanding, considering its earnings visibility, growth prospects, decent dividends and balance sheet/ cashflow strength,” it said
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