KUALA LUMPUR, Nov 19 (Bernama) -- Bursa Malaysia gave up earlier gains to end mixed today, amid a higher regional market showing, as property, construction, and healthcare counters attracted buying interests, while plantation, banking, and telecommunication stocks saw some profit-taking, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.70 points to close at 1,602.34 from yesterday’s close of 1,604.04. The benchmark index, which opened 0.86 of-a-point lower at 1,603.18, moved between 1,601.02 and 1,608.88 during the trading session. However, the broader market was mixed to higher, with gainers leading decliners by 565 to 438 while 502 counters remained unchanged, 961 untraded, and 14 suspended. Turnover narrowed to 2.83 billion units valued at RM2.08 billion versus 2.96 billion units valued at RM2.23 billion yesterday. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the benchmark index remained range-bound and it required a dec
Reiterate BUY and MYR4.35 SOP-based TP
4QFY1/16 results, due next week, are unlikely to spring any surprises. Operationally, the conversion of its FPSO Genesis is on schedule (which market has yet to fully appreciate the impact) and the planned sale of its non O&G operations will be concluded by 2HCY16. The expected 15sen special DPS (5% yield) is a short-term catalyst and Yinson stays in position to capitalise on the demand for new FPSO projects worldwide.
Results to meet our expectation
Yinson’s 4QFY1/16 results are expected to be out next week. We expect Yinson to post a core net profit of MYR40m-49m (-12%-28% QoQ; +7%+32% YoY) in 4QFY1/16. This would bring FY16 core earning to MYR172m-181m, within our forecasts but below consensus’ MYR193m. The FSO/FPSO operations continue to be the Group’s key earnings driver. We expect weaker earnings from OSV and its non O&G operations (trading & transport). We do not rule out a DPS for 4Q16, based on historical trend.
CY17: Delivery of FPSO Genesis, sale of non O&G ops
We expect FY17 to be a flattish earnings year as Yinson prepares for the delivery of its FPSO Genesis, which is on schedule for first oil production in CY17. We expect FPSO Genesis to contribute MYR50m (a 6-month impact) to Yinsons’s FY18 earnings. Meanwhile, the planned divestment of its non O&G operations is expected to be completed by 2HCY16. We expect shareholders to be rewarded with a special DPS of 15 sen from this transaction.
A steady cash generating entity soon …
Post sale of its non O&G biz, Yinson will generate steady cash flows from its FSO/FPSO operations, potentially turning it into a dividend play stock. A policy will likely be unveiled soon. We value Yinson’s: (i) FSO/ FPSO operations on NPV, (ii) ports operations on 1x book value and (iii) OSV, transport, trading & project management businesses on 8-10 PERs.
Source: Maybank Research, 25 March 2016
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