Yinson projected to win at least one FPSO job

TheStar Thu, Jan 14, 2021 10:40am - 1 week ago

Big projects: Yinson’s FPSO John Agyekum Kufuor. The company is currently re-tendering three FPSO projects worth billions of ringgit.

PETALING JAYA: Yinson Holdings Bhd is expected to win at least one floating production storage and offloading (FPSO) contract and may look at fundraising to fund any new projects.

According to Kenanga Research, Yinson is currently re-tendering three FPSO projects worth billions of ringgit, namely Limbayong FPSO in offshore Sabah, Pecan FPSO in offshore Ghana and Parque das Baleias off Brazil.

“These three projects were initially planned to be awarded last year but given the circumstances such as Covid-19 pandemic and plunge in oil prices, the timelines were deferred.

“Nonetheless, as a gradual recovery is underway, rebidding for these projects is expected to be reopened for submission again in the near future, ” it said in a report.

The research house expects the contract awards to be announced by the second half of this year.

As such, Kenanga has upgraded its rating on Yinson to “outperform” with a higher target price of RM6.95 per share as it expects the group to secure at least one new contract this year.

However, it said the valuations have yet to factor in any potential equity fundraising or rights issue, which may be necessary in funding these new projects in the event of a contract win.

“Keen investors should also be wary of the counter’s risk of failing syariah-compliance during the year, ” Kenanga pointed out.

The Limbayong project is estimated to cost about US$700mil in capital expenditure (capex), while the Pecan and Parque das Baleias projects would require US$800mil and US$1bil capex, respectively.

Interestingly, Kenanga said that for the Parque das Baleias, Yinson had previously emerged as the project’s sole bidder after the disqualification of the only other bidder – a partnership between Bluewater and Saipem, due to financial difficulties.

“After over a year of exclusive negotiations, Petrobras had in October 2020 opted to push back the project’s first oil date by a year to 2024 and subsequently reopened tenders for the FPSO, with scope of the project remaining unchanged, ” it said.

Kenanga reckoned that Yinson may once again emerge as the project’s sole bidder during the re-tendering, given the industry’s backlog capacity.

Shares in Yinson closed 1.07% higher at RM5.66 yesterday, giving it a market capitalisation of RM6.22bil.

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