‘Job will boost Yinson’s earnings beyond 2020’
KUALA LUMPUR: Yinson Holdings Bhd’s recent win of the US$1 billion (RM4.3 billion) Ca Rong Do field development floating production storage and offloading (FPSO) bare-boat charter contract will provide earnings visibility to the company beyond 2020, said Maybank Investment Bank (Maybank IB).
“Based on our estimate, the bare-boat charter equates to an average daily charter rate of US$218,000 (on firm) and US$110,000 (on extension).
“We understand that Yinson has identified FPSO OSX-1 for this job. OSX-1 is a distressed, offhire asset, previously owned by OGX that operated in Brazil and is ready for re-deployment.
“On a firm charter basis, we estimate this job to add RM45 million to RM80 million per year to Yinson’s net earnings over financial years 2021-2030,” said the research house in a note.
Maybank IB remains positive on Yinson’s outlook as its valuations are undemanding vis-à-vis its long-term earnings growth prospect, cash flow strength and for its lean management.
“Its likely admission as a syariah-compliant stock come May is a major positive,” it added.
Maybank IB estimates that the market has largely priced in the impact of the recent contract termination of FPSO Lam Son.
“There is earnings upside from here, for we have yet to impute the impact from the immediate redeployment beyond July.”
Maybank IB reiterated a “buy” call on Yinson, with a higher target price of RM4.30 from RM4.06 previously.