Overview. Yinson’s 3QFY22 core PATAMI declined 50% yoy and 12% qoq to RM98m mainly due to slower construction progress of FPSO Anna Nery as it already reached 75% completion. The FPSO is expected to achieve first oil in 1Q23 as scheduled.

Key highlights. Yinson currently has 6 operating FPSO vessels and 1 FPSOs on order (FPSO Anna Nery) with cumulative outstanding orderbook of USD9.64bn whereas the contracted revenue from its solar plant PPA stands at USD710m.

Against estimates: Inline. We deem its result as within estimate as 9MFY22 EBIT of RM790m made up 71% of our forecast.

Outlook. The company recently secured FPSO Parque project worth c.USD5bn which will start contributing to its earnings beginning Jan 2022. Besides that, we understood the company is coming closer to close another deal with Enauta to supply FPSO in Brazil. This will sustain its earnings growth over FY22-24F.

Shariah compliance. Yinson was excluded from the SC’s updated List of Shariah-Compliant Securities in Nov 2021. This is due to as its conventional debt has breached the allowable limit set by the Syariah Advisory Council of Securities Commission of Malaysia (SACSC) as we highlighted in our previous report.

Our call. Despite promising earnings growth in medium term, we cease our coverage on Yinson due to its shariah non-compliance. We think it may not be able to regain its shariah compliant status anytime soon as it will continue to add more conventional debts to finance its second FPSO project (FPSO Parque) in Brazil. The refinancing of conventional debts can only be done upon project completion which is by 2024 onwards.

Source: BIMB Securities Research - 20 Dec 2021