• Keep BUY and new TP of MYR6.49 from MYR7.18, 45% upside. Removing one-off items and engineering, procurement, construction, installation and commissioning (EPCIC) gains, FY22 (Jan) results came in within our expectations. FPSO demand remains robust amidst tight supply, which give contractors more bargaining power. We expect strong earnings growth in FY24F-25F once Yinson achieves final acceptance of the three new projects.

• FY22 core profit of MYR312m (-14% YoY) was within our expectations, at 96% and 83% of our and Street full-year estimates. We believe Street numbers would have been distorted, as some regarded EPCIC earnings as core profit. A second interim DPS was declared, bringing FY22 DPS to 6 sen – as expected.

• 4QFY22 core earnings fell 13% QoQ to MYR75m, dragged by losses from the renewables segment as a result of higher administrative cost and one- off re-financing costs as well as higher tax expenses. It comes after stripping off a MYR6m net FX gain, MYR29m FV loss on other investments and MYR20m in EPCIC gains. FY22 core earnings fell 14% YoY, dragged by lower contributions from VLCCs and higher operating costs. This was partially cushioned by the FPSO Abigail Joseph contribution. Note that the renewables segment, which encapsulates the solar asset in India, has generated stable revenue of MYR72m but recorded net losses of MYR10m as mentioned above.

• Outlook. The conversion of FPSO Anna Nery is progressing well, at c.90% completion currently. While it is uncertain as to whether it will be affected by the lockdown in China moving forward, the alternative plan is to complete the conversion at other yards before sailing away and the FPSO operations are set to kickstart by 1QCY23. Management guided that overall global FPSO demand remains robust and Yinson has been receiving queries from potential clients. The group is currently interested in six projects, including four projects in Angola and one project in Suriname. The remaining one is the re-deployment opportunity for Lamson in Vietnam. It is also comfortable to secure one large and one medium size project. As for the renewable energy (RE) segment, Yinson is targeting to secure a 3GW pipeline by end- 2022 and expand the operating portfolio of 5-10GW by 2028 in 5-7 markets.

• Keep BUY. We slashed FY23F-24F earnings by 10-13%, factoring in higher financing costs and FY25F earnings of MYR834m (+83% YoY) introduced assuming maiden contribution from the PDB and Atlanta projects. Our SOP- derived TP is lowered to MYR6.49 after earnings adjustments and net debt update. Our ex-bonus and rights TP (before exercise of warrants) is MYR2.56 based on the Scenario 3 assumptions stated in the circular. Our TP also incorporates a 4% ESG premium. Downside risks: Further contract terminations and weaker-than-expected operating uptime for existing vessels.

Source: RHB Research - 30 Mar 2022