Yinson’s core net profit above estimates

KUCHING: Yinson Holdings Bhd’s (Yinson) first nine months of 2017 (9M17) core net profit has come in above analysts’ estimates, largely due to lower-than-expected finance cost.

In a filing on Bursa Malaysia, Yinson’s condensed consolidated income statement for the nine months period ended October 31, 2016 revealed that the group had recorded RM145.55 million profit for the period, compared to RM168.61 million in the year earlier period.

According to the research arm of Kenanga Investment Bank Bhd ( Kenanga Research), Yinson’s 9M17 core net profit of RM138.1 million came above consensus forecast and its at 85 per cent and 82 per cent of the respective fullyear estimates.

“The positive variance was largely due to lower-than-expected finance cost,” it said.

Kenanga Research’s core net profit was adjusted for RM2.3 million profit from the discontinued operations, RM12.2 million unrealised forex gain, RM1.6 million net fair value loss on investment and RM3.5 million loss on disposal.

No dividend was declared as expected by the research arm.

On Yinson’s new contracts, Kenanga Research noted that all the group’s contracted whollyowned and jointly-owned vessels (FPSO Allan, Adoon, PTSC Lam Son and FSO PTSC Bien Dong 01) are operating at 100 per cent uptime in the third quarter of 2017 (3Q17) and contributing steady cash flows whilst Yinson is still collecting management fees on MOPU Marc Lorenceau, which is automatically renewed on a monthly basis.

“On the other hand, Yinson is also eyeing new projects in Vietnam, Ghana and Nigeria,” it said.

Kenanga Research has increased its financial year 2017-2018 estimate (FY17-18E) forecasts by 12 per cent to three per cent accounting for lower finance cost.

Post earnings adjustment, the research arm still expected earnings growth of 38 per cent in FY17 assuming five- month contribution from Yinson Genesis and forex assumption of RM4.10 per US dollar.

Post the completion of divestment exercise and distribution of special dividend of 14.6 sen per share and earnings adjustment, Kenanga Research’s ex-target price was lowered to RM3.79 per share from RM3.92 per share previously.

“Meanwhile, based on our ballpark estimates, the Vietnam’s Ca Rong Do project could be worth at least an additional RM0.20 per share to our valuation if Yinson secures the job,” it said.

Kenanga Research maintained ‘outperform’ on Yinson.