Yinson set to secure second FPSO charter

by BERNAMA / pic by TMR FILE

YINSON Holdings is poised to secure a second huge floating production storage and offloading (FPSO) charter for the Parque das Baleias (PDB) revitalisation field off Brazil.

“This could add RM1.65 per share to our sum of parts, bringing it to RM8.85 per share – assuming a 65 per cent equity stake in the project, capital expenditure of US$1 billion and project internal rate of return of 15 per cent,” AmInvestment Bank said in a note today.

It maintained a “buy” recommendation on the stocks, with an unchanged sum-of-parts (SOP) based fair value of RM7.20 per cent share, which implies a financial year 2022 forecast (FY22F) price-to-earning of 18 times.

The investment bank also raised its FY21F– FY23F earnings for the company by 13 per cent–17 per cent, largely due to the accelerated profit recognition from the charter of Petrobras’ FPSO vessel Anna Nery.

“This stems from the progressive recognition of engineering, procurement, construction, installation and commissioning profit until project completion under the finance lease accounting adoption.

“Given the group’s net debt/earnings before interest, taxes, depreciation and amortisation of three times, we expect the group to proceed with a rights issue upon successfully securing the PDB charter,” it said.

Assuming a RM700 million rights issue to fund this substantive capex and a 40 per cent discount to the current market price, the bank also estimate that the theoretical ex-SOP price could drop to a still compelling and value accretive RM7.80 per share.

It added that the transportation and logistics company currently have a strong order book of RM42 billion.

At lunch break, shares of Yinson rose eight sen to RM5.72, with 199,000 shares transacted.