KUALA LUMPUR, April 4 (Bernama) -- Bursa Malaysia closed lower today, with the benchmark index falling by 0.97 per cent, as persistent selling across various sectors weighed on the market, which continued to feel the impact of sweeping US tariffs. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) dipped 14.77 points to 1,504.14 from Thursday’s close of 1,518.91. The benchmark index opened 9.90 points easier at 1,509.01 and fluctuated between 1,500.90 and 1,515.74 throughout the day. In the broader market, losers thumped gainers 777 to 185, while 366 counters were unchanged, 1,031 counters untraded and 19 others suspended. Turnover fell to 1.81 billion units valued at RM1.89 billion against Thursday’s 2.51 billion units valued at RM1.81 billion.
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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