Yinson Holdings Bhd (Dec 27, RM1.95)
Not rated at RM1.91: Yinson’s results yielded no surprises. The business transformation into an oil and gas (O&G) floating solution operator is well on the way and should act as a catalyst for this small-cap stock with undemanding valuations. Yinson is not rated.
Net profit grew a stronger 49% quarter-on-quarter in 3QFY12 on higher revenue (23% q-o-q) and earnings before interest and tax (Ebit) margin (+1.3 percentage points q-o-q). Growth was boosted by a RM2 million gain from a land sale. Stripping off the one-off gain, core net profit grew 22% q-o-q, bringing 9MFY12 core net profit to RM18 million (+49% year-on-year). All divisions reported q-o-q growth. The transport division led Ebit growth (+267%), followed by trading division (+90%) and marine (+1.4%) segments. No dividend was declared in 3Q.
The trading division remains the largest contributor to earnings in 3QFY12 (50% of Ebit). Ebit grew 90% q-o-q on increased volume. The transport division’s q-o-q revenue (+8%) and Ebit (+267%) growth was aided by a realignment of business focus from building materials to O&G, which yields higher Ebit margins (+9 percentage points). While the marine division reported a 24% q-o-q growth in revenue (on delivery of a new 5,000bhp anchor handling tug supply service (AHTS) vessel in October), Ebit grew only a nominal 1% q-o-q, dragged down by mobilisation expenses (RM0.4 million) for the new AHTS vessel.
Yinson expects to achieve core net profit of RM25 million to RM26 million in FY12 on a stronger 4QFY12 (RM7 million to RM8 million) with full impact of the new AHTS vessel but offset by an RM2 million expense for its rights issue. It should report higher profit in FY13 with full-year contribution of its new AHTS and we expect Yinson may add another two new build AHTS vessels in 2012. FY14’s earnings visibility will be strongest as its floating storage and offloading (FSO) vessel, backed by a 10-year firm contract, will be deployed in March 2013. Yinson should deliver higher net profit of RM28 million for FY13 and RM34 million for FY14.
The three-for-two rights issue is expected to be completed by January 2012. Post completion of the exercise, Yinson’s share base will rise by 150% to 188.4 million with net gearing falling to 0.9 times. Institutional shareholding has risen to 15% (from 0%) since it announced the FSO contract in June 2011. Daily volume traded has tripled to 29 million shares now from sub-10 million previously. — Maybank IB Research, Dec 27
This article appeared in The Edge Financial Daily, December 28, 2011.
Not rated at RM1.91: Yinson’s results yielded no surprises. The business transformation into an oil and gas (O&G) floating solution operator is well on the way and should act as a catalyst for this small-cap stock with undemanding valuations. Yinson is not rated.
Net profit grew a stronger 49% quarter-on-quarter in 3QFY12 on higher revenue (23% q-o-q) and earnings before interest and tax (Ebit) margin (+1.3 percentage points q-o-q). Growth was boosted by a RM2 million gain from a land sale. Stripping off the one-off gain, core net profit grew 22% q-o-q, bringing 9MFY12 core net profit to RM18 million (+49% year-on-year). All divisions reported q-o-q growth. The transport division led Ebit growth (+267%), followed by trading division (+90%) and marine (+1.4%) segments. No dividend was declared in 3Q.
The trading division remains the largest contributor to earnings in 3QFY12 (50% of Ebit). Ebit grew 90% q-o-q on increased volume. The transport division’s q-o-q revenue (+8%) and Ebit (+267%) growth was aided by a realignment of business focus from building materials to O&G, which yields higher Ebit margins (+9 percentage points). While the marine division reported a 24% q-o-q growth in revenue (on delivery of a new 5,000bhp anchor handling tug supply service (AHTS) vessel in October), Ebit grew only a nominal 1% q-o-q, dragged down by mobilisation expenses (RM0.4 million) for the new AHTS vessel.
Yinson expects to achieve core net profit of RM25 million to RM26 million in FY12 on a stronger 4QFY12 (RM7 million to RM8 million) with full impact of the new AHTS vessel but offset by an RM2 million expense for its rights issue. It should report higher profit in FY13 with full-year contribution of its new AHTS and we expect Yinson may add another two new build AHTS vessels in 2012. FY14’s earnings visibility will be strongest as its floating storage and offloading (FSO) vessel, backed by a 10-year firm contract, will be deployed in March 2013. Yinson should deliver higher net profit of RM28 million for FY13 and RM34 million for FY14.
The three-for-two rights issue is expected to be completed by January 2012. Post completion of the exercise, Yinson’s share base will rise by 150% to 188.4 million with net gearing falling to 0.9 times. Institutional shareholding has risen to 15% (from 0%) since it announced the FSO contract in June 2011. Daily volume traded has tripled to 29 million shares now from sub-10 million previously. — Maybank IB Research, Dec 27
This article appeared in The Edge Financial Daily, December 28, 2011.
