YINSON HOLDINGS BHD

By AmInvestment Bank Research Buy (maintained) Fair Value: RM4.50

THE buy call on Yinson Holdings by AmInvestment Bank Research has been maintained with a higher fair value of RM4.50 per share, while the earnings forecast for FY18 was raised by 10%.

This comes as the group’s core net profit of RM187mil for the first half of FY18 (1H18) came in above expectations, accounting for 68% of its forecast.

As comparison, 1H17 accounted for 45% of FY17 core net profit.

However, the research house noted that it only slightly raised its forecast for FY19FY20 earnings as the group’s sale of a 26% equity stake in its wholly-owned floating production storage and offloading vessel (FPSO) John Agyekum Kufuor (JAK), expected to be completed by December this year, is expected to lead to a moderation in the earnings momentum.

The research house also raised its FY18FY20 dividend assumptions as Yinson has declared an interim dividend of 4 sen, which is above its forecast for the full year. The group’s core net profit for the second quarter surged 41% quarter on quarter to RM110mil due to the commencement of the JAK FPSO, formerly named Yinson Genesis.

This also drove the group’s earnings before interest, tax, depreciation and amortisation margin from 59% in Q1 to 85% in Q2.

Over the longer term, the research house expects Yinson’s earnings growth to be further supported by its 49%-owned Ca Rong Do (Red Emperor) FPSO, which is targeted to achieve first oil in September 2019.

“There are still further prospective value enhancements to the group as its 51%owned FPSO Four Rainbow, currently idle, could be redeployed in the South-East Asian region,” it said.