PETALING JAYA: Energy infrastructure and technology company Yinson Holdings Bhd has recorded a 158% year-on-year (y-o-y) surge in profit for the fourth quarter ended Jan 31, 2023 (4Q23).
It reported a RM168 million net profit for the period from Nov 1, 2022 to Jan 31, 2023, up from RM65 million in the previous corresponding period.
Compared with the previous quarter, the net profit was up 8% from RM155 million.
This brought the full year net profit to RM586 million, up 48% from FY22 on the back of higher revenue.
Revenue rose 75.3%, from RM3.6 billion in FY22 to RM6.3 billion in FY23.
Yinson’s core business is in the offshore production and marine segment, which consists of engineering, procurement, construction, installation and commissioning (EPCIC) activities, as well as floating production, storage and offloading (FPSO) activities.
“The increase in revenue was mainly due to higher contributions from the group’s FPSO operations mainly driven by the strengthening oil prices and higher contribution from EPCIC business activities (based on progress of construction),” Yinson said in a filing with Bursa Malaysia.
However, the group’s burgeoning renewables segment posted a loss of RM129 million, down from a profit of RM34 million in FY22.
This was attributed to impairment losses of RM117 million, as project costs increased due to a rise in the price of solar panels.
Additionally, Yinson suffered unrealised foreign exchange losses of RM30 million due to the strengthening of the US dollar in the current financial year.
Yinson is expected to benefit from the increasing global energy demand.
“The demand for FPSOs is positive given the increase in project sanctions around the world particularly from Brazil, being the highest FPSO demand centre, followed by West Africa,” Yinson said.
However, the group also took note of the significant risks posed by sanctions on Russia and Belarus, as well as higher interest rates.
“Supported by our existing portfolio of long-term contracts, we believe we can achieve satisfactory results for the financial year ending Jan 31, 2024,” it said.
In a note issued on March 1, Kenanga Investment Bank Bhd maintained its “outperform” call for Yinson at a higher target price of RM3.65 from RM3.05.
The better assessment came on the heels of Yinson winning a US$310 million (RM1.37 billion) contract for the Agogo FPSO, which was first announced in December 2022.
Kenanga noted that this will be one of the biggest contracts in Yinson’s order book.
“While our previous valuations had included a new win assumption, the actual contract size was higher than our initial assumptions,” said Kenanga.
The investment bank was won over by Yinson’s strong market position, supported by a fleet of nine FPSOs, making it the fourth-largest player in the world and the largest amongst Malaysian players.
Additionally, the group’s untainted track record of project deliveries and diversification into renewables continue to future-proof the group’s earnings.
Key risks to Kenanga’s call include crude oil prices falling below hurdle rates for floating production projects, and cost overruns, delays or downtimes.
At the close of trade today, Yinson’s share price inched up 1.68% to RM2.42, giving it a market capitalisation of RM7.41 billion.