Yinson: High valuation calls for high earning...

Results Update

For QE31/7/2014, Yinson's net profit increased by 2% q-o-q or 200% y-o-y to RM31 million while revenue was mixed- down 5% q-o-q but rose 23% y-o-y to RM281 million. The bottom-line improved by RM0.4 million q-o-q due to better segmental results (albeit lower revenue) and lower finance costs, which more than offset higher tax charge and lower share of results from associate and JVs. When compared to the same quarter last year, Yinson's bottom-line improved by RM20 million due to higher segmental results of RM20 million (of which RM16 million was contributed by the Marine division) and higher share of results from associate and JVs, which more than offset the increase in finance costs and tax charges.


Table 1: Yinson's last 8 quarterly results


Chart 1: Yinson's last 28 quarterly results 

Valuation

Yinson (RM3.38 last Friday) is now trading at a trailing PE of 30.4 times (based on last 4 quarters' EPS of 11.07 sen). At this multiple, Yinson is deemed fully valued.

Technical Outlook

Yinson is in an uptrend, with support at RM3.00 (using the 20-week SMA line as a proxy for uptrend line).


Chart 2: Yinson's weekly chart as at Sep 26, 20114 (Source: Tadesignum)

Conclusion
Despite good financial performance & positive technical outlook, it is not easy to make a case to buy Yinson due to its high valuation. For now, I would rate it a HOLD.

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.