‘Job will boost Yin­son’s earn­ings be­yond 2020’

New Straits Times - - Business -

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.

The Yin­son Hold­ings Bhd team at the sign­ing cer­e­mony for the de­vel­op­ment of the Ca Rong Do field re­cently.

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