We maintain BUY on Yinson Holdings (Yinson) with unchanged forecasts and a sum-of-parts-based fair value of RM3.83/share, which implies a FY18F PE of 17x. Following the analyst briefing on Friday, the salient points of the meeting are as follows:

We maintain BUY on Yinson Holdings (Yinson) with unchanged forecasts and a sum-of-parts-based fair value of RM3.83/share, which implies a FY18F PE of 17x. Following the analyst briefing on Friday, the salient points of the meeting are as follows:

• The group’s wholly-owned FPSO John Agyekum Kufuor (formerly known as Yinson Genesis) is on track to reach first oil by August this year. Currently with a comfortable lead time which is 2 months ahead of schedule, the risks for this project lie mostly on the client ENI’s ability to finalise the field development tie-ins.

• Besides the FPSO Allan, currently producing below capacity for Canadian National Resources in the Olowi field in Gabon, the charter for the group’s 49%-owned FPSO PTSC Lam Son, currently working in the Thang Long-Dong Do Field in Vietnam, is also at risk of cancellation. This FPSO, which produced its first oil in June 2014 on a 7-year charter with a yearly extension option for another 3 years, contributes an estimated net profit of RM50mil annually. In the event of a DCF-neutral termination, we expect Yinson to recoup the remaining NPV bareboat charter, which we estimate at RM460mil currently -11% of Yinson’s SOP.

• Moving forward, the primary earnings driver for the group will be the maiden contribution from the FPSO Yinson Genesis. As first oil is expected by August 2017, we expect the full-year contribution from this new FPSO to underpin the group's FY19F earnings growth of 38%. Meanwhile, Yinson's 49%-owned Ca Rong Do FPSO, with its charter expected to be finalised this month, could reach first oil in September 2019.

• Given Yinson’s locked-in earnings visibility with an order book of US$3.7bil (23x FY18F revenue), the stock currently trades at a bargain CY18F PE of 12x vs. over 20x for Dialog Group and Petronas Gas.

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

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