Quick take: Yinson share rise on earnings beat

KUALA LUMPUR: Shares in Yinson Holdings Bhd rose almost 2% after the group beat analyst expectations in its latest quarterly results.

The offshore oil and gas services provider added 1.95%, or 11 sen to RM5.75. It is trading at a PE ratio of 29.78 times.

Yinson’s net profit in the second quarter ended July 31, 2020 rose 144% to RM100.36mil from RM41.14mil in the same quarter a year ago. Its revenue jumped to RM995.58mil from RM213.44mil in the preceding year corresponding quarter.

For its half year under review, Yinson’s net profit rose 61.6% year-on-year to RM147.1mil, while revenue climbed 217% year-on-year to RM1.34bil.

Kenanga Research said Yinson posted 1HFY21 core net profit of RM234.7mil, coming in above expectations, at 60% of the house, and 64% of consensus, full-year earnings forecasts.

“The better-than-expected earnings were due to the recognition of engineering, procurement, construction, installation and commissioning (EPCIC) profits arising from the construction of the FPSO Anna Nery which started during the quarter, as a result of finance lease accounting treatment for the contract.

“Nonetheless, the announced interim dividend of 4.0 sen per share (same as 1HFY20) is deemed well within expectations,” it said.

Kenanga said despite the strong year-to-date results, 2HFY21 is anticipated to be even stronger as the charter of FPSO Abigail-Joseph is expected to commence by end-October 2020.

Note that upon commencement of the charter, the company will recognise an accounting treatment of a one-off sale revenue of the FPSO, not too dissimilar to the one recognised back in 4QFY20 arising from the commencement of FPSO Helang.

“Maintain outperform, with unchanged SoP-target price of RM7.10 (implies FY22E forward PER of 15x). Post-results, we raised our FY21E/FY22E earnings assumption by 25%/24% to account for higher recognition of EPCIC profits,” Kenanga said.

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