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Analysts raise earnings forecast on Yinson

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PETALING JAYA: Analysts have raised their earnings forecast on Yinson Holdings Bhd for financial year ending Jan 31, 2017 (FY17) on the back of better-than-expected core profit reported in its third quarter.

Kenanga Research has raised its earnings forecast on Yinson by 12%-13% for FY17 and FY18 on the back of lower finance cost.

“Third-quarter 2017 core net profit increased by 7% attributable to stronger performance of US dollar against the ringgit, 42% lower finance cost and better operating efficiency offsetting the 64% higher tax expense,” it said in a report.

Meanwhile, Maybank IB Research has raised its FY17 core earnings forecast on Yinson by 10%.

Yinson, which is one of the better-performing oil and gas (O&G) stocks on Bursa Malaysia, had reported a 26% decline in net profit for the third quarter to RM63.11mil due to lower impairment in receivables and favourable fair value in derivative contracts, but was offset by lower favourable foreign-exchange movement.

For the cumulative nine-month period, net profit was down 16.45% to RM145.85mil on the back of a 16.09% increase in revenue to RM357.79mil.

Kenanga said Yinson’s gross profit margin for the nine months has improved by 18% to 48% due to lower vessel operating expenses.

It expects Yinson’s earnings to grow by 38% in FY17 on the back of the company’s job in Ghana and forex assumption of RM4.10 per US dollar.

Maybank said that any potential win of new floating production storage and offloading (FPSO) jobs would be a re-rating prospect for Yinson.

“We expect a 22% three-year net profit compound annual growth rate from FY17-FY19.

“This is driven by FPSO Genesis, contracted to Eni in Ghana on a 15+5 year charter, which is expected to contribute RM150mil-RM200mil per annum to the group’s earnings from mid-2017,” it said in a report.

Shares in Yinson closed 1 sen higher to RM2.89 yesterday. On a year-to-date basis, its share price has risen more than 4.4%.



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