CGS-CIMB expects Yinson’s results for rest of the year to be stronger than for 1QFY2024

KUALA LUMPUR (June 26): CGS-CIMB Securities has maintained its “add” rating on Yinson Holdings Bhd at RM2.56 with a lower target price (TP) of RM3.50 (from RM3.68), saying Yinson’s 1QFY2024 core net profit was below expectations at 15% of the research house's previous full-year estimate but above Bloomberg consensus at 30%.

In a note on Monday (June 26), the research house said the underperformance was mainly due to lumpy cost items, which was reflected by cutting Yinson’s FY2024F core EPS forecast by 20%.

CGS-CIMB, however, said it expects Yinson’s results for the rest of the year to be stronger than it was for 1QFY2024.

“This is because Yinson told sell-side analysts on Friday evening that some of the cost provisions it had made were lumpy in nature and may not recur. Also, the FPSO Anna Nery achieved first oil on May 7, 2023, from which date it received its full BBC rate.

“In addition, the Anna Nery received provisional acceptance on Nov 15, 2022 and was entitled to receive 90% of the BBC rate 50 days later, ie from Jan 3, 2023 up to the day prior to first oil, ie May 6, 2023.

“This 90% rate has not yet been booked, subject to assessment by Petrobras, and we expect this to be booked in the current or next quarter.

“If this was received in 1QFY2024, it would have increased revenue by RM200 million and Patami by RM75 million, according to Yinson, after deducting for 25% minority interest," it said.