Journey to Wealth
Yinson Holdings - Above Expectations Again
Period 2Q13/1H13
Actual vs. Expectations
Yinson's 2Q13 net profit of RM9.8m brought its 1H13 net profit to RM20.4m. The 6MFY13 net profit was again ahead of expectations, accounting for 66% of ours (RM31.0m) as well as 65% that of the consensus' (RM31.4m) full year estimates.
The variance to our estimate was again due to the better-than-expected performance from its transport and trading divisions.
Dividends No dividends were declared in the quarter.
Key Results Highlights
YoY, the 2Q13 net profit grew by 80% mainly on the back of 1) revenue improvements for the transport and trading divisions and 2) margin expansion in the marine division (+21.6pts) due to a full-quarter impact of the new 10,880bhp AHTS in 2Q13. To recap, the new AHTS started its maiden operations in Apr 2012. We had already included this AHTS in our assumptions.
QoQ, the 2Q13 net profit was down 10.7% due mainly to the lower trading division's earnings. This is in line with our previous guidance that the trading activity will normalise after 1Q13, which was then buoyed by post-CNY restocking exercises.
Outlook Management guided that there could be a further slowdown in 3Q13 as the price of its trading division goods in continue to taper off.
In the long run, we are positive on the company as its growth trajectory is accelerating. The company is looking to kick-start its FSO operations in FY14 and FPSO operations in FY15.
Strong links to PTSC are a precursor to more Vietnamese opportunities and it is expected to post a 3-year net profit CAGR of 38.3%.
Change to Forecasts
Despite the strong performance in 1H13, we are maintaining our full year numbers as we expect a weaker 2H13 on the back of a slowdown in its trading division.
We had already factored in some earnings increases in the previous results season.
A stronger-than-expected trading division performance in 3Q13 could prompt us to review our forecasts later.
Rating MAINTAIN OUTPERFORM
Valuation Our target price is unchanged at RM2.68/share based on FY14 Sum-of-Parts (SOP) valuation.
Risks 1) Significant reliance on Petrovietnam poses an earnings risk to Yinson; 2) high capex requirements and 3) contractual and project execution risks of new projects due to its inexperience.
Source: Kenanga
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