PETALING JAYA: Brokerage firms are positive on the prospects of Yinson Holdings Bhd as some of its projects may cross the completion rate threshold by the second quarter ended July 31,2023 (Q2’23) although its core net profits have been on the downtrend over the past five quarters.
The energy infrastructure and technology provider’s net profit for Q4’22 fell 2.9% to RM65mil from RM67mil a year ago due to scheduled lower progress in the engineering, procurement, construction, installation and commission (EPCIC) business activities.
CGS-CIMB Research noted that Yinson’s net profit in Q4’22 was hit by a RM29mil provision for loss on an investment product.
However, it said that the group expects to eventually recoup the losses as it has insurance protection and for the provision to be written back in the future.
That said, the research house said the group’s Atlanta and Maria Quiteria projects may cross the 20% completion rate threshold by Q2’23, allowing Yinson to book in the EPCIC revenues and profits from these projects.
“The downtrend in earnings could reverse by the May-July 2022 forecast quarter.
“Also, we expect the Anna Nery charter to start in the fourth quarter of 2023 calendar year forecast,” it added.
Meanwhile, RHB Research expects strong earnings growth in the financial year ending Jan 31, 2024 (FY24) and FY25 forecasts once Yinson achieves final acceptance of the three new projects.
The research house said the management guided that overall global floating production storage and offloading (FPSO) demand remains robust noting that the group has been receiving queries from potential clients.
It pointed out that the group is currently interested in six projects, including four projects in Angola and one project in Suriname.
“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 end-2022 and expand the operating portfolio of 5GW to 10GW by 2028 in five to seven markets,” it noted.
That said, Maybank Investment Bank Research is also optimistic on the prospects of Yinson supported by the strongest FPSO prospects as the group is able to capitalise on in this upcycle as well as the clearest carbon reduction footprint strategy to-date.
Although the research house has cut 6% in FY23 earnings due to higher costs, its outlook remains promising with the expected deliveries of Enauta Energia S.A at the Atlanta field and Petrobras’ Parque das Baleias over the next three financial years.
“The EPCIC profits from these two projects and the charter commencement of FPSO Marlim 2 in 2023 will elevate earnings growth in FY23-FY25,” said the research house.
Maybank Investment Bank Research is keeping a “buy” call on Yinson with a target price of RM11.15.