Higher depreciation clouds Yinson’s earnings outlook

By the Editorial Team · Tuesday, October 20, 2026

Yinson Holdings maintained stable operations supported by debt repayments and the refinancing of its Agogo FPSO, but UOB Kay Hian cut earnings forecasts for 2027-2029 due to higher depreciation charges reported by its FPSO unit. Despite these downward revisions and ongoing operational challenges, the company’s improved debt profile and steady EBITDA led analysts to keep a “buy” rating with a target price implying potential stock gains.

Yinson Holdings Bhd’s operational performance remains stable, supported by ongoing debt repayments and the refinancing of its Agogo floating production, storage, and offloading (FPSO) vessel, according to UOB Kay Hian (UOBKH) Research. However, the research firm has lowered its earnings forecasts for the company’s financial years 2027 through 2029, citing higher depreciation figures disclosed by Yinson Production (YP), the group’s FPSO subsidiary.

UOBKH revised its earnings estimates down by 47% for FY27, 49% for FY28, and 39% for FY29 after accounting for increased depreciation under Yinson’s enterprise reporting (ER) framework. Despite the reductions, the research house maintained a “buy” rating on Yinson with an unchanged target price of RM2.40, which suggests a potential upside of 12.7% from the stock’s RM2.13 closing price on October 19.

The firm emphasized that while its earnings before interest, tax, depreciation, and amortization (EBITDA) forecasts remained steady, the higher depreciation charges led to considerable downward adjustments in net earnings. ER depreciation for YP in the first half of FY27 reached US$173 million, substantially above the US$41 million recorded under International Financial Reporting Standards (IFRS). This contrasts with the same period last year, when ER depreciation stood at US$119 million versus US$34 million under IFRS.

Yinson’s latest financial results also reflect other factors influencing profitability. One-off financing costs of approximately US$10 million arose from the early repayment of the Agogo FPSO’s US$383 million junior loan. In addition, YP incurred a US$3 million incentive bonus related to the FPSO Anna Nery, and the FPSO Maria Quiteria experienced somewhat weaker performance linked to delays in charter payments from Brazil’s state-controlled oil company Petrobras.

For the second quarter of FY27, YP’s ER-based revenue increased to US$312 million from US$261 million a year earlier, while adjusted EBITDA climbed to US$205 million from US$135 million. Nevertheless, reported profits attributable to shareholders swung to a loss of US$7 million, compared to a US$32 million profit in the prior year period, primarily due to higher depreciation and financing expenses.

Operational challenges were noted in some FPSOs. FPSO Anna Nery saw a 9.6% reduction in average oil production, down to 42,000 barrels of oil equivalent per day during the quarter as a result of scheduled maintenance. Supplementary charter hire income, however, helped mitigate the overall impact. Meanwhile, FPSO Maria Quiteria recorded losses under ER, with UOBKH attributing the negative results to outstanding payments from Petrobras. Approximately 95% of charter and operations and maintenance costs during a planned shutdown remained unpaid 30 to 50 days after submission of the payment request.

On a positive note, the refinancing of the Agogo FPSO has enhanced Yinson’s debt profile. The group issued a new US$1.5 billion project bond with a 6.5% coupon rate, significantly lower than the 8.5% to 8.9% rates on bonds for its other Brazilian FPSO assets.

Analysts have pointed to key uncertainties for Yinson’s outlook, particularly whether the company can translate its substantial order book into stronger cash flow, secure additional FPSO contracts, and achieve earnings growth without rising financing costs undermining its returns.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.