RHB Research has maintained a “Buy” recommendation for Yinson Holdings Bhd with a new target price of RM6.49.
It said that by removing one-off items and engineering, procurement, construction, installation, and commissioning (EPCIC) gains, FY22 (Jan) results came in within our expectations. ‘FPSO demand remains robust amidst tight supply, which gives contractors more bargaining power.
RHB said that it expects strong earnings growth in FY24F-25F once Yinson achieves final acceptance of the three new projects
RHB Research said that its SOP-derived TP is lowered to MYR6.49 after earnings adjustments and net debt update. Our ex-bonus and rights TP (before exercise of warrants) is MYR2.56 based on the Scenario 3 assumptions stated in the circular.
“Our TP also incorporates a 4% ESG premium. Downside risks: Further contract terminations and weaker-than-expected operating uptime for existing vessels,” RHB said.
The stockbroking firm said that It slashed FY23F-24F earnings by 10-13%, factoring in higher financing costs and FY25F earnings of MYR834m (+83% YoY) introduced assuming maiden contribution from the PDB and Atlanta projects.
RHB said that the conversion of FPSO Anna Nery is progressing well, at c.90% completion currently. While it is uncertain as to whether it will be affected by the lockdown in China moving forward, the alternative plan is to complete the conversion at other yards before sailing away and the FPSO operations are set to kickstart by 1QCY23.
It said that the management guided that overall global FPSO demand remains robust and Yinson has been receiving queries from potential clients. The group is currently interested in six projects, including four projects in Angola and one project in Suriname.
The stockbroking firm said that the remaining one is the re-deployment opportunity for Lamson in Vietnam. It is also comfortable to secure one large and one medium size project. As for the renewable energy (RE) segment, Yinson is targeting to secure a 3GW pipeline by end2022 and expand the operating portfolio of 5-10GW by 2028 in 5-7 markets.
