• Overview. Excluding RM84m worth of write-off arising from deposit forfeiture of Ezion acquisition, Yinson’s 3QFY21 core PATAMI grew 40% qoq to RM186m driven by structural earnings growth from FPSO Abigail-Joseph (AJ) which commenced its charter to First E&P Ltd effective in Nov 20. On yoy basis, core earnings leaped by threefold due to maiden earnings from both FPSO AJ and construction gain of FPSO Anna Nery (AN) beginning 2QFY21.
• Key highlights. Including FPSO AJ, Yinson currently has 6 operating FPSO vessels and 1 FPSO on order (FPSO AN). Outstanding firm orderbook as at 3QFY21 remained strong at USD10bn (2QFY21: US$10.1bn).
• Against estimates: Inline. 9MFY21 core profit was more than double to RM412m mainly due to construction gains from FPSO AN and maiden charter income from FPSO AJ. This made up 89% of our full year FY21F earnings forecast.
• Outlook. FY22F earnings growth to be sustained by full-year contribution from FPSO AJ lease charter and FPSO AN construction gain. We also expect Yinson to participate in the FPSO Parque re-bid exercise in CY2021 which could potentially increase its orderbook by 30% to USD15bn.
• Our call. Maintain our BUY call with unchanged SOP-derived TP of RM6.30 which implies 12x FY22F P/E (Table 2). We remain sanguine over its outlook due to (i) its huge orderbook of lease income of USD10bn to be recognised over the next 25 years and (ii) additional income from renewable projects to further sustain its earnings.

Source: BIMB Securities Research - 22 Dec 2020