• Overview. 2QFY20 core earnings fell 37% yoy to RM50m due to higher minority charges from FPSO JAK and expiry of FPSO Allan in Jan 2019. On QoQ basis, earnings were slightly lower by 3%.

• Key highlights. Orderbook as at 2QFY20 stood at US$4.9bn (or RM20.6bn) which is c.20x FY20F revenue.

• Against estimates: Below. 1HFY20 core profit of RM101m (-28% yoy) made up 40% and 39% of ours and consensus’ forecasts respectively. We deem this as inline as we expect stronger 2HFY20 on new contribution from FPSO Helang hire charter.

• Dividend. Yinson declared an interim DPS of 4 sen which implies payout ratio of 42%. This was similar to the DPS paid in 2QFY19.

• Outlook. In the near term, we expect earnings to pick up on structural earnings growth from FPSO Helang and FPSO Abigail Joseph which may commence charter in 2HFY20 and 1HFY21 respectively. Long term outlook is also bright as we expect Yinson to finalise the FPSO Marlim and FPSO Parque contract from Petrobras soon which may triple its orderbook to US$17bn.

• Our call. Maintain our BUY call with unchanged SOP-derived TP of RM7.70 which implies 33x FY20F PE before it drops to 22x for FY21F (Table 2). We see further upside to the stock price as it offers vast growth potential amidst rising FPSO demand and limited competition.

Source: BIMB Securities Research - 26 Sept 2019