Yinson- time for some profit-taking

Results Update

Yinson has just announced its results for QE30/4/2011. Its net profit increased by 6% q-o-q or 51% y-o-y to RM7 million while turnover increased by 30% q-o-q or 7% y-o-y to RM197 million. However, Yinson's bottom-line has benefited from a gain of RM1.18 million on disposal of subsidiary, Yinson haulage Sdn Bhd. If this item is excluded from the bottom-line, Yinson's net profit dropped 11.5% q-o-q but still rose 26% y-o-y to about RM6 million.


Table 1: Yinson's last 8 quarterly results



Chart 1: Yinson's last 14 quarterly results

Valuation

Yinson (closed at RM1.82 yesterday) is trading at a PE of 6.3 times (based on last 4 quarters' adjusted EPS of 28.8 sen). Yinson, which is involved in the provision of transportation, shipping, forwarding, and marine transport services, can be compared to Tasco. However, Tasco is currently trading at a PE of 5.5 times, based on its last 4 quarters' EPS of 27.1 sen & closing price of RM1.49 yesterday. If the market is willing to value this sector at around 6 times earning, then Yinson's upside potential is considered limited.

Technical Outlook

Yinson broke above its 'loudhailer' formation at RM1.05-1.10 in May & rose to its recent high of RM1.87. If we extrapolated the potential upside by adding the width of the 'loudhailer' to the breakout level, that target price is about RM1.85-1.90. As such, the present price could be a good level for some profit-taking.


Chart 2: Yinson's monthly chart as at June 28, 2011 (Source: Quickcharts)

Conclusion

Based on technical consideration & market valuation cap, I believe it is a good time to take some profit on Yinson.