Yinson a safe-haven in a challenging market

KUCHING: Yinson Holdings Bhd’s (Yinson) floating production storage and offloading ( FPSO) business model provides a safe haven amidst the current storm that is ravaging the oil & gas (O&G) sector, RHB Research Sdn Bhd ( RHB Research) observed.

“Yinson provides defensive stability in an otherwise volatile O&G market given its long-term FPSO contracts as well as stable cash flows,” it highlighted.

It further pointed out that once the Yinson Genesis is operational, management would consider a sustainable dividend payout ratio for the company.

The research team noted that Yinson’s fifth FPSO is expected to have a sail-away date in January 2017 with a handover to operations expected in July 2017.

“We believe that the start-up of the Yinson Genesis in the f inancial year 2018 forecast ( FY18F) will contribute about RM60 million to RM70 million to Yinson’s bottomline, resulting in an almost doubling of earnings,” it opined.

Meanwhile, it noted that Yinson currently has four f loating production, storage and offloading (FPSO) vessels in operation, with Knock Adoon currently in its optional extension period, with another three years up to FY19, while Knock Allan is expected to serve its full firm contract period until FY20.

“We understand that both FPSO PTSC Lam Son and FSO Bien Dong, both 49 per cent owned by Yinson, have been on an operational uptime of circa 100 per cent in FY17F,” it added.

Aside from that, RHB Research said Yinson and Bumi Armada are the frontrunners for the Ca Rong Do O&G project (which is being operated by Repsol) off the coast of Vietnam.

“The proposed first date of first oil is expected to be in 2019. We also understand that the contract for the FPSO will likely be awarded in the next six to 12 months.

“The floater for the project is expected to have a processing capacity of 25,000 to 30,000 barrels ( bbls)/day ( bpd) of oil and 60m standard cu ft/day (mmscfd) of natural gas.