Yinson Holdings Bhd
Outperform. Target price: RM3.41
YINSONS’S FY24 core net profit of RM383 million (adjusted for RM36 million forex gain, RM112 million deferred tax expense, and RM647 million EPCIC profit) met our forecast.
YoY, its FY24 revenue surged 84% mainly due to the commencement of oil production by FPSO Anna Nery in May 2023 and higher EPCIC revenue from FPSO Agogo’s conversion. However, its core profit (excluding EPCIC profits) only grew 21% due to elevated finance cost as it drew down loans for upcoming projects, and widened losses in other segments, which include higher overheads from project startup expenses for new FPSO projects.
QoQ, its Q4’24 topline saw a 4% decrease mainly due to lower work recognition in FPSO conversion projects. When excluding the EPCIC impact, revenue from FPSO operations remained stable. However, its core profit fell by 11% due to increased interest cost as the group drew down more borrowings (for FPSO Agogo and Maria Quiteria).
We continue to favour YINSON due to: (i) a strong FPSO order book pipeline with multiple major FPSO jobs under the conversion stage which provide significant earnings growth in coming years, (ii) its strong project execution track record which positions the company to benefit from strong structural demand for FPSO contractors anticipated in the coming years, and (iii) it being one of the first local oil & gas company invest in green technology companies which in our view would help with the company’s long-term energy transition agenda.
We fine-tune down our FY25F earnings forecast by 2%, trim our TP by 1% to RM3.41 (from RM3.44) but maintain our OUTPERFORM call.