• In-line: 1QFY1/16 core earnings accounted for 25%/27% of our/consensus full year estimates.
• Special dividend a short-term catalyst, eyes new FPSO jobs.
• Maintain BUY and MYR4.35 SOP-based TP.

What’s New

Headline 1QFY1/16 net profit of MYR10m (-90% QoQ; -66% YoY) reflects an exceptional loss of MYR30m arising from forex (- MYR17m)/derivatives (-MYR13m). USD was weaker against MYR, averaging MYR3.56 as at 30 Apr 2015 vs. MYR3.63 at 31 Jan 2015. Yinson’s business is long USD. Stripping that off, Yinson reported a core net profit of MYR40m (+8% QoQ; +39% YoY).

The offshore marine services (FPSO and OSV) operations continued to be the core earnings driver (42%/56% of group’s revenue/core pretax profit). It reported an EBIT growth of 24% YoY in 1Q16 due to a MYR4.8m savings in management fees following the acquisition of FOMS’ database for its legacy vessels and cost savings of MYR3.2m on FPSO Allan’s MPSV. This offset losses from the disposal of its 50%-owned Petroleo Nautipa in 3Q15. Its trading division reported a 38% YoY jump in EBIT, on a 22% YoY fall in revenue, on improved margins. Its logistics division was in the red (MYR0.3m).

What’s Our View

Our forecasts are unchanged. Yinson is a growth stock with resilient earnings. The jump in profits will be significant come FY18 once its FPSO OCTP job (15+5 year charter) commences operations in Sep 2017 (NP: MYR110m-170m p.a).

Proceeds from the divestment of its non O&G business for MYR228m and the 10% new share placement exercise, raising MYR292m, will come in handy for future projects, working capital and improving its balance sheet. We do not rule out the potential distribution of part of the proceeds from the divestment to shareholders in the form of a special dividend.

Source: Maybank Research - 1 Jul 2015