by HARIZAH KAMEL / pic credit: yinson.com
YINSON Holdings Bhd is eyeing a retender for the floating production storage and offloading (FPSO) charter for the Limbayong project in the second quarter of 2021 (2Q21), according to an AmInvestment Bank Bhd (AmInvest) research report.
Its analyst Alex Goh said the project, located off Sabah, is likely to be awarded to Yinson in 2Q21, while the capital expenditure (capex) could be reduced to US$600 million from US$700 million (RM2.9 billion) due to the revised project scope.
“Yinson may bid for the charter alone (this time around) instead of (remain) partnership with MISC Bhd in the earlier tender,” he stated.
AmInvest maintained a ‘Buy’ call on Yinson with an unchanged sum-of-parts (SOP) based fair value of RM7.20 per share, which implies a financial year 2022 forecast (FY22F) price-to-earnings multiple of 18 times.
The forecast has not incorporated any contribution from the Petróleo Brasileiro SA (Petrobras) retendered charter of an FPSO vessel to be deployed at the Parque das Baleias (PDB) revitalisation field in the Campos basin, off Brazil.
Last week, Petrobras cancelled the earlier PDB tender and authorised a new bid process with an unchanged project scope to reduce the costs by opening it up to more competition.
Goh noted that Yinson was expected to secure the tender as the company was the only remaining bidder.
“The new bid is likely to open next month with an award likely by mid-2021 for the commencement of the PDB FPSO to be rescheduled by a year to the end of 2024.
“As very-large-crude-carrier (VLCC) size of the FPSO is unchanged, Yinson does not expect substantive reductions to the estimated capex of US$1 billion, which was already lowered in the earlier bid during direct negotiations with Petrobras over the past months,” he said.
He said the bidding cost of below US$10 million is likely to be capitalised for the new bidding process for PDB as Yinson has completed the engineering design and costing process.
The group is thus unlikely to incur any impairment provision from this development at this stage.
Besides PDB, Yinson is also looking at a charter from Brazil-based independent producer Enauta Participacoes SA to provide a VLCC-sized FPSO in the
Atlanta deep-water heavy oil field in the Santos basin, off Brazil.
A tender is likely to be opened in 3Q21 with an award by end-2021.
Yinson, Goh noted, remains on the prowl for additional renewable energy projects, hoping to expand its portfolio by 500MW to 1GW from a 95% equity stake in a 160MW plant in Bhadla Solar Park II in Rajasthan, India.
This could mean additional investments of up to US$100 million which Yinson is likely to source from external borrowings.
“We are mildly negative on the delay as the PDB project could have raised our SOP by 60 sen to RM7.80 per share, assuming a RM700 million rights issue to fund this substantive capex and a 40% discount to the current market price.
“Nevertheless, the group still has multiple opportunities to expand its SOP with the robust pipeline of fresh projects, underpinned by a strong outstanding orderbook of RM42 billion,” added Goh.
For the 2Q ended July 31, 2020, Yinson’s net profit jumped 144% year-on-year (YoY) to RM100.35 million, lifted by greater contribution from the engineering, procurement, construction, installation and commission segment.
Revenue shot up by 366% YoY to RM995.58 million.
Yinson’s share price hit a six-month low yesterday, closing 61 sen lower at RM4.82, giving the company a market capitalisation of RM5.14 billion.