Comprehensive Analysis of Yinson Holdings: An In-depth Financial Review

Authored by Maybank Investment Bank Berhad

December 16, 2024

Introduction

In the latest financial report provided by Maybank Investment Bank Berhad, Yinson Holdings (YNS MK) has been evaluated on its recent performance and future prospects. This report delves deep into the company’s financial metrics, market strategy, and operational efficiencies, positioning Yinson as a significant player in the oil and gas industry.

Yinson Holdings: Financial Performance and Market Position

Yinson Holdings is recognized as the third-largest independent Floating Production Storage and Offloading (FPSO) leasing entity worldwide. The company’s diversified portfolio includes Offshore Support Vessels (OSV) as a complementary business line. The report provides a comprehensive analysis of Yinson’s financial results for the third quarter of FY2025, reflecting a core net profit of MYR52 million, which shows a 70% decline quarter-over-quarter and an 82% decline year-over-year. This brings the cumulative nine-month core earnings to MYR441 million, a 39% decline year-over-year.

Key Financial Metrics

Yinson’s revenue for FY2025 is expected to be MYR7,413 million, with an estimated EBITDA of MYR3,829 million. The core net profit is projected at MYR845 million, reflecting a slight decrease from previous estimates. Despite these challenges, Yinson maintains a strong balance sheet with assets totaling MYR27,990.7 million and liabilities at MYR18,720.1 million.

Strategic Initiatives and Market Outlook

Yinson’s strategic outlook remains positive, with expectations to secure at least one new mid-sized FPSO project by FY2026. The company is poised to benefit from the robust global tender pipeline, with an anticipated 13 awards in the FPSO market over the next 12 months. Yinson’s strategic focus includes transitioning away from a high capital expenditure cycle, aiming to de-risk from construction, cost-overrun, and delivery risks.

Future Prospects and Growth Drivers

The company’s growth trajectory is supported by its commitment to environmental, social, and governance (ESG) initiatives, making it an attractive choice for investors. The completion rate for the Agogo project is already at 80%, with first oil expected in the fourth quarter of FY2026.

Valuation and Investment Recommendation

Maybank Investment Bank Berhad maintains a ‘BUY’ recommendation for Yinson Holdings with a 12-month price target of MYR4.78, reflecting a 78% upside from the current share price of MYR2.68. This valuation is underpinned by Yinson’s solid track record, strong market position, and potential for future growth.

Comprehensive Financial Analysis

The valuation incorporates a Sum of Parts (SOP) method, considering the net present value (NPV) of the company’s floating assets, solar park investments, and residual value of its assets. Yinson’s financial ratios, including a core price-to-earnings (P/E) ratio of 10.1x for FY2025 and a net dividend yield of 1.5%, further support the investment case.

Conclusion

Yinson Holdings stands as a robust investment opportunity in the oil and gas sector, backed by strategic growth initiatives and a strong financial foundation. Investors are encouraged to consider Yinson’s potential for long-term value creation, supported by its comprehensive strategic framework and market leadership.