Date: 01 October 2024
Broker: UOB Kay Hian Private Limited
Company Overview
Yinson Holdings Bhd is one of the largest pure global Floating, Production, Storage and Offloading (FPSO) operators, with Engineering, Construction, Procurement, Installation and Commissioning (EPCIC) capabilities.
Stock Data
- Share Price: RM2.68
- Target Price: RM3.90
- Upside: +45.5%
- GICS Sector: Energy
- Bloomberg Ticker: YNS MK
- Shares Issued: 2,907.1 million
- Market Cap: RM7,122.3 million (US$1,503.7 million)
- 3-Month Avg Daily Turnover: US$1.6 million
- 52-Week High/Low: RM2.70/RM2.35
Price Performance
- 1 Month: -0.8%
- 3 Months: 0.0%
- 6 Months: -3.5%
- 1 Year: +2.9%
- Year-to-Date: -2.0%
Major Shareholders
- Yinson Legacy: 16.6%
- EPF: 17.3%
Financial Highlights
- FY25 NAV/Share: RM1.68
- FY25 Net Debt/Share: RM4.68
Recent Performance
1HFY25 profits were derived from Yinson’s existing operational FPSO fleet, with Anna Nery being the latest addition. Expectations are set for a step-up in FPSO earnings starting from 4QFY25 as new FPSOs gradually contribute to earnings, aiming for a cumulative income base of RM0.4 billion per quarter. Analysts remain unperturbed by slight delays in Brazil FPSOs and interest rate volatility, maintaining a “BUY” recommendation with a target price of RM3.90.
Key Financials
- 2QFY25 Results:
- Revenue: RM2,142.0 million (down 29.0% qoq, down 3.3% yoy)
- EBITDA: RM1,080.0 million (up from RM900 million yoy)
- Pre-tax Profit: RM333.0 million (up 12.5% qoq, down 6.7% yoy)
- Reported Profit: RM203.0 million (down 2.4% qoq, flat yoy)
- Core Profit: RM126.0 million (up 10.0% qoq, down 31.5% yoy)
Operational Insights
- The core profit from the FPSO division is in line with expectations, anticipating a stronger 2HFY25, with the first oil for FPSO Atlanta and FPSO Maria Quiteria expected in 4QFY25. Yinson Renewables recorded an operating profit of RM9 million in 1HFY25, reflecting progress in tariff claims from Indian solar plants.
Financial Position
The loan base increased from RM16 billion to RM20 billion, primarily for capital expenditure of RM3 billion. Around 90% of the loans are allocated for oil and gas projects. A US$670 million project loan was secured for FPSO Anna Nery. The net gearing ratio rose from 2.4x to 3x year-on-year, and the company’s ability to manage its debt burden continues to be scrutinized.
Strategic Developments
- Project Progress: FPSO Atlanta’s operations were delayed due to the Brazilian Environmental Institute (IBAMA) issuing its operating license only in September 2024. This pushed the first oil production back to December 2024 or 2025.
- Accounting Transparency: Yinson is undertaking a voluntary accounting disclosure for a strategic review and possible IPO spin-off of its FPSO subsidiary, introducing a new “Enterprise Accounting” method to clarify financial disclosures.
- Hedging Strategies: Active cash flow hedging has been implemented against interest rate volatility, demonstrating Yinson’s capability to manage finance expenses effectively.
Conclusion
Yinson Holdings Bhd continues to navigate operational challenges while pursuing growth in the energy sector, focusing on enhancing its FPSO capabilities and green energy initiatives, positioning itself as a forward-thinking player in the industry.
