Yinson’s FY18F earnings raised for possible higher FPSO margin

KUCHING: Yinson Holdings Bhd’s ( Yinson) financial year 2018 forecast ( FY18F) earnings has been raised by 10 per cent for higher FPSO margin assumptions as the group’s first nine months of FY18 ( 9MFY18) core net profit came in above AmInvestment Bank Bhd’s research arm’s (AmInvestment Bank) expectations.

Yinson’s 9MFY18 core net profit of RM276 million ( excluding impairments and unrealised forex losses) accounted for 91 per cent of the research firm’s FY18F forecast and consensus, compared with 9MFY15 to 9MFY17 which accounted for 58 to 68 per cent of FY15 to FY17 core earnings.

However, AmInvestment Bank maintained FY19F to FY20F earnings as Yinson’s sale of a 26 per cent equity stake in the group’s whollyowned floating production storage and off loading vessel ( FPSO) John Agyekum Kufuor ( JAK), which is now expected to be completed by March 2018, will lead to a moderation in the earnings momentum.

Meanwhile, no interim dividend was declared, as expected by the research firm.

“There are still further prospective value enhancements to the group as its 51 per cent- owned f loating production storage and off loading ( FPSO) Four Rainbow, currently idle, could be redeployed in the Southeast Asia region,” AmInvestment Bank said.

“Recall that Yinson is in discussions with JX Nippon Oil & Gas Exploration ( M) Limited and TH Heavy Engineering to take over the charter for the FPSO, expected to cost less than US$ 400 million and to be deployed in the Layang field in Block SK10 off Sarawak.”

AmInvestment Bank highlighted that there is also a strong likelihood that Yinson’s 49 per cent- owned joint venture with PetroVietnam Technical Services Corporation ( PTSC) for the FPSO PTSC Lam Son may be securing a new valueenhancing charter early next year after finalising the early termination fee.

“Yinson may also be eyeing a Hess- related FPSO project in Ghana, which could cost over US$ 1 billion, similar to the group’s earlier vessel for Eni. Hess’ Tano- Cape Three Points off Ghana recently won a territorial dispute with the Ivory Coast,” it added.

Overall, AmInvestment Bank maintained ‘ buy’ on Yinson.

Yinson’s FY18F earnings has been raised by 10 per cent for higher FPSO margin assumptions as the group’s 9MFY18 core net profit came in above expectations.