Maybank IB Research retains buy on Yinson, TP at RM7.20


  • Analyst Reports
  • Thursday, 26 Mar 2020

“Yinson is our key O&G pick for its comprehensive business model, orderbook visibility, resilient earnings and management acumen to weather prevailing oil price volatility, ” Maybank IB Research said.

KUALA LUMPUR: Maybank Investment Bank Research is retaining its Buy call on YINSON and its sum-of-parts based target price of RM7.20 after it results for the financial year ended Jan 31,2020 came in within its expectation but below consensus.

It said on Thursday its earnings estimates were unchanged as it expects a stronger FY1/21 performance (+70% YoY).

“Yinson is our key O&G pick for its comprehensive business model, orderbook visibility, resilient earnings and management acumen to weather prevailing oil price volatility, ” it said.

It said the stronger QoQ performance 80% of 4QFY1/20 revenue of RM1.9bil comprised the outright sales recognized upfront for FPSO Helang following the adoption of the finance lease (vs. operating lease) accounting method for this asset.

Yinson’s headline net profit of RM65mil (+20% QoQ) in 4Q20 included a one-off loss of MYR16mil from: (i) warranty loss provided for projects (RM10mil), (ii) forex loss (RM8mil) and (iii) shortfall in JV’s insurance claims (RM5mil).

Excluding that, core net profit was a higher RM81m (+53% QoQ), which took FY20 core earnings to RM229mil (-16% YoY) which was 103% of its estimates and 91% of consensus estimates.

Maybank IB Research pointed out the QoQ core strength was largely fuelled by: (i) maiden contribution from FPSO Helang (two-month impact) and (ii) contributions from its VLCCs spot charters.

Yinson’s net debt/ Ebitda and net gearing levels were at 3.3 times and 0.7 times in FY20.

It forecasts Yinson’s net profit growth of 70% YoY in FY1/21.

“The underlying YoY growth in FY21 will be fuelled mainly by the full-year/ maiden earnings impact from FPSO Helang/ FPSO Abigail-Joseph.

“Correspondingly, we expect Yinson to finalise Petrobras’ PDB charter by May 2020 and Aker’s Pecan contact by Sep 2020. Ezion’s exercise is not a done deal yet. Yinson’s shareholders' votes will hinge on the viability of Ezion’s turnaround at the EGM.

“Key pick in the sector Yinson’s strong earnings visibility (a 16-year weighted average lease expiry charter period, on a firm basis; US$10bil), cash-generative model (Ebitda of RM1bil per annum) and sound financials (three times net debt-to-Ebitda) will enable it to navigate through the current uncertain and volatile oil market better than its peers, ” Maybank IB Research said.

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