• Overview. 4QFY20 core PATAMI grew to RM86m (+83% qoq, +48% yoy) driven by new contribution from FPSO Helang which commenced its lease charter to JX Nippon in Dec 2019. Our core earnings exclude unfavourable FX of RM8.8m and warranty cost provided for FPSO Helang worth RM10.3m.

• Key highlights. Orderbook as at 4QFY20 stood at US$10.2bn (3QFY20: US$10.3bn).

• Against estimates: Inline. FY20 core profit of RM233m was lower by 17% yoy mainly due to the end of FPSO Allan charter in 4QFY19. Overall, it came within both our and consensus’ forecasts at 96% and 104% respectively.

• Dividend. The board proposed a final interim DPS of 2 sen, subject to approval of shareholders during the AGM. This brings total FY20 DPS declared to 6 sen (FY19: 6 sen) which implies payout of 23%.

• Outlook. Despite the steep drop in oil prices, Petrobras – which accounts for about 50% of global new FPSO demand – proceeded with its Mero 3 and Mero 4 tender bids recently. This should come as no surprise as Petrobras’ cash lifting cost is low at $6.5/bbl in 4Q2019. As such, we are optimistic that Yinson will be able to finalise the FPSO Parque contract from Petrobras within the next 6 months albeit possibly at lower DCR than initial expectation. In the near-term, earnings growth is expected to be sustained by full year earnings contribution from FPSO Helang and the commencement of FPSO Abigail-Joseph (converted from FPSO Allan) charter in 1HFY21.

• Our call. Maintain our BUY call with unchanged SOP-derived TP of RM7.70 which implies 22x FY21F P/E (Table 2). We see its fundamental remains intact as its future projects with Petrobras are showing no sign of slow down while its existing contracts are backed by early termination clause and strong credit rating clients.

Source: BIMB Securities Research - 26 Mar 2020