PETALING JAYA: Yinson Holdings Bhd
’s operations remain on track, supported by ongoing debt repayments and the successful refinancing of its Agogo floating production, storage and offloading (FPSO) vessel, says UOB Kay Hian (UOBKH) Research.
UOBKH Research cut its financial year 2027 (FY27), FY28 and FY29 earnings forecasts by 47%, 49% and 39%, respectively, after adjusting for higher depreciation disclosed by Yinson Production (YP), Yinson’s FPSO subsidiary.
It has maintained its “buy” call on Yinson Holdings Bhd with an unchanged target price of RM2.40, despite cutting its earnings forecasts by up to 49% for FY27 ending January 2027 to FY29 following higher-than-expected depreciation under the group’s enterprise reporting (ER) framework.
“Our ER-based earnings before interest, tax, depreciation and amortisation or Ebitda forecast is unchanged, but our earnings forecast is adjusted for higher depreciation in tandem with ER disclosure, which resulted in the earnings cuts,” the research house said.
It added that the depreciation changes would not affect its valuation.
YP’s ER depreciation for the first half of FY27 stood at US$173mil, compared with US$41mil under the International Financial Reporting Standards (IFRS).
For the corresponding period last year, ER depreciation was US$119mil, against the IFRS depreciation of US$34mil.
Despite the earnings revisions, UOBKH Research retained its target price of RM2.40, implying an upside of 12.7% from Yinson’s share price of RM2.13 on Oct 19.
The research house’s assessment also took into account additional information from Yinson’s latest results.
These include an estimated US$10mil in one-off financing costs arising from the early repayment of Agogo’s US$383mil junior loan, a US$3mil incentive bonus for FPSO Anna Nery, and slightly weaker performance from FPSO Maria Quiteria due to delayed charter payments from Brazil’s Petrobras.
For the second quarter of FY27, YP’s ER revenue rose to US$312mil from US$261mil a year earlier, while adjusted Ebitda increased to US$205mil from US$135mil.
However, reported profit attributable to shareholders turned into a loss of US$7mil, compared with a profit of US$32mil a year earlier, reflecting higher depreciation and financing costs.
UOBKH Research highlighted that FPSO Anna Nery recorded a 9.6% decline in average oil production to 42,000 barrels of oil equivalent per day during the quarter due to a planned shutdown. Nevertheless, supplementary charter hire revenue from scheduled maintenance helped support its performance.
Meanwhile, FPSO Maria Quiteria reported a loss under ER, with the research house attributing the weakness partly to outstanding payments from Petrobras.
Payments covering 95% of charter and operations and maintenance costs during a planned shutdown remained pending, 30 to 50 days after the request was submitted.
The Agogo refinancing also improved the group’s debt repayment profile. Its new US$1.5bil project bond carries a 6.5% coupon, lower than the 8.5% to 8.9% rates on the project bonds for its other two Brazilian FPSOs.
An analyst told StarBiz that the key question is whether Yinson can convert its large order book into stronger cash flows, secure new FPSO contracts and deliver earnings growth without higher financing costs eroding returns.
