Yinson: Bottom-line improved due to forex & disposal gain

Results Update

For QE31/10/2014, Yinson's net profit increased by 183% q-o-q or 460% y-o-y to RM87 million while revenue was mixed- down 9% q-o-q but rose 8% y-o-y to RM255 million. Pre-tax profit increased due to RM20.9 million gain on the disposal of a subsidiary and stake in a JV, increase in forex gain of RM24.8 million and higher contribution from its marine segment.


Table 1: Yinson's last 8 quarterly results

From the table below, we can see that Yinson's revenue growth came from the Marine segment while the Trading segment has suffered decline in revenue. At the same time, the Marine segment contributed a sizable chunk of its operating profit.


Table 2: Yinson's segmental results for QE31/10/2014


Chart 1: Yinson's last 29 quarterly results 

Valuation

Yinson (RM2.81 yesterday) is now trading at a trailing PE of 15.2 times (based on last 4 quarters' EPS of 18.4 sen). However, if we exclude the exceptional gain from disposal of subsidiary & stake in JV plus forex gain, the last 4 quarters' EPS would be reduced to. ~14.0 sen and PE would rise to 20 times. While the earning growth has been solid, it is doubtful that this trend will continue given the current weak crude oil environment. As such, Yinson is deemed fully valued for now.

Technical Outlook

Yinson is in an uptrend, with support at RM2.40 (using the 20-month SMA line as a proxy for uptrend line). The RM2.40 level is also the neckline for a head-and-shoulder formation which is still intact. If Yinson stay above the neckline of the head-and-shoulder formation, it will convert from a potential reversal pattern to a continuation pattern; thus signaling the continuation of the prior or current uptrend.


Chart 2: Yinson's monthly chart as at Dec 22, 20114 (Source: ShareInvestor.com)

 
Chart 3: Yinson's weekly chart as at Dec 22, 20114 (Source: ShareInvestor.com)

Conclusion
Based on satisfactory financial performance & positive technical outlook, Yinson is rated a good stock for medium-term investment. However, its upside potential is limited as the stock is fully valued for now.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Yinson.