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Chasing for FPSO wins

Maintain BUY and MYR6.65 TP

1H22 results were in line with our forecast. The FPSO market is heating up and Yinson is at the forefront to capitalise on these prospects. It has the capacity to take on 2-3 new jobs (capex: USD1.5b) and will undertake a MYR1b rights should this crystalize. Our SOP-based TP has not incorporated new FPSO win(s). It is also ESG conscious, fully invested in the energy transition agenda, far ahead of its peers, a positive.

1H22: Stronger YoY; declared 4 sen DPS in 2Q22

Yinson reported core net profit of MYR117m (+1% QoQ; -14% YoY) in 2QFY22, which took 1HFY22 core earnings to MYR233m (+4% YoY); 42% of our FY estimate. We deem this in line, on expectation of a stronger 2H, on higher O&M workflows and EPCIC contributions. The YoY strength in 1HFY22 was driven by the profit turnaround at its: (i) associate (+MYR11m vs. -MYR5m in 1H21) and (ii) RE ops (+MYR18m vs. –MYR28m) and (iii) FY impact from FPSO Abigail Joseph (AJ) (+MYR44m). This was offset by lower profits (rates & volume) from VLCC charters (-MYR60m).

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FPSO space is heating up – job wins in the horizon

Our estimates are unchanged. The YoY growth in FY22 will be driven by higher: (i) FPSO AJ contribution (12M impact) and (ii) EPCIC ops (FPSO Marlim 2). Its long-term outlook remains promising in the O&G space, with the recent signing of a MOU with Enauta for a FPSO project. Yinson has the capacity to take on 1-2 new jobs (capex: USD1.5b) without systemic risk. Winning 1-2 projects such as Petrobras’ PDB, Total’s Block 20/21 (Angola) & Block 58 (Suriname), Aker’s Pecan and PETRONAS’ Limbayong, to name a few, will further lift our TP and earnings. It is committed to do a MYR1b rights exercise to fund its growth.

Accelerating its energy transition agenda

Yinson has set a target to grow its RE capacity portfolio from 330MW to 3GW/ 10GW by 2023/29. It recently partnered Verano Capital, which offers access to the Latin America market and 800MW of development pipeline prospects. It has also invested in green technology and accelerates its low carbon, e-mobility adoption via these start-ups: (i) Oyika (e-2Ws), (ii) Moovita (autonomous vehicle) and (iii) Lift Ocean AS (hydrofoil technology for marine harbour crafts).