AMBANK Research maintains buy recommendation on Yinson Holdings (Yinson) with an unchanged sum-of-parts based fair value of RM7.20 per share, which implies a price-to-earnings (PE) ratio of 18 times based on the forecast for the financial year ending Jan 31, 2022.
“We have raised our earnings forecast for financial year ending Jan 31, 2021 to Jan 31, 2023 (FY21F–FY23F) by 13% to 17% largely due to the accelerated profit recognition from the charter of Petrobras’ floating production, storage and offloading (FPSO) vessel Anna Nery (formerly known as Marlim 2),” said analyst Alex Goh.
“This stems from the progressive recognition of engineering, procurement, construction, installation and commissioning (EPCIC) profit until project completion under the finance lease accounting adoption,” he added.
AmBank Research said Yinson’s core net profit of RM243 mil (excluding impairments, forex and RM20 mil one-off compensation gain for the commencement delay of Abigail–Joseph FPSO) for the first half of financial year ending Jan 31, 2021 (1HFY21), came in above its expectations, accounting for 65%–66% of its and consensus’ FY21F earnings vs. only 46%–47% in the previous 2 years.
It added that the group declared an interim dividend of 4 sen, unchanged year-on-year, which was within its expectations.
“Underpinned by a strong outstanding order book of RM42 bil (US$10.3bil), which translates to 16 times of revenue forecast for the financial year ending Jan 31, 2021, the stock currently trades at an attractive price-to-earnings ratio of 13 times based on the forecast for financial year ending Jan 31, 2022. This is at a 43% discount to its 5-year peak of 23x in February this year,” AmBank Research said.
As at 11.40am today, Yinson Holdings share price was at RM5.76 with a market capital of 6.31 billion. – Sept 29, 2020
