[RAM] RAM Ratings affirms Yinson Holdings' corporate credit and IMTN ratings

RAM Ratings has affirmed Yinson Holdings Berhad’s (Yinson or the Group) A1/Stable/P1 corporate credit ratings and the A1/Stable rating of its Islamic Medium-Term Notes (IMTN) Programme of up to RM1.0 bil.

In line with our expectations, the substantial progress of vessels under construction and growth in FPS operations almost doubled Yinson’s top line to RM11.65 bil for FY Jan 2024 (FY Jan 2023: RM6.32 bil). Strong earnings from these operations, partially offset by higher financing costs, contributed to a bottom line of RM1.56 bil, more than twice the sum in FY Jan 2023 (RM718 mil). 

The pause in securing new FPSO contracts last year allows Yinson’s balance sheet time to recover from hefty debts incurred in building four vessels in close succession. The Group is currently bidding for new contracts, which if successful, are likely to come at the end of this year at the earliest. Over the next three years, we expect adjusted debts (excluding non-recourse) to continue to rise in the near term, with gearing peaking at over 2 times. Adjusted OCF debt coverage will stay at about 0.06 times in the next two years and may improve thereafter.

The ratings continue to be supported by Yinson’s positioning among the world’s largest independent FPSO players. A strong track record of prompt FPS delivery and operations places the Group favourably in a sector exposed to significant execution and construction risks, with high barriers to entry. Yinson’s FPS leasing contracts amounting to USD19.31 bil as at end-January 2024 span 7-25 years, providing stable long-term revenue and earnings. Its small number of charterers, however, exposes the Group to customer concentration risk.

Yinson owns and operates two solar plants in India, with a total installed capacity of 330 MW. The Group has set clear climate goals of reaching carbon neutrality by 2030 and net zero by 2050 by growing its renewable energy segment significantly and reducing the carbon footprint of its offshore operations. Its green technologies division is relatively small, with investments in nascent businesses and a modest fleet of offshore support vessels.


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Ben Inn
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ben@ram.com.my

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