PETALING JAYA: Yinson Holdings Bhd should see its share price recover by the middle of this year, after the completion of its corporate exercise.

       CGS-CIMB Research noted that the energy infrastructure and technology provider’s share price had been weak since it first announced on Dec 20, 2021 of its intention to execute a rights issue as it believed that investors have had to reduce their holdings in the company in order participate in the upcoming rights issue.

       “Once the rights issue is completed, we think that Yinson’s share price could recover as the rationale for selling will no longer be present, “ the research house told clients in a report.

       The rights issue is for Yinson’s floating production, storage, offloading (FPSO) Maria Quiteria project, which will be deployed in the Parque das Baleias fields offshore Brazil by late 2024, it added.

       In the report, CGS-CIMB Research also said there were several FPSO contracts that were likely to be awarded in the second half of this year, three of which Yinson was gunning for, namely TotalEnergies’s Cameia, BP’s SE-PAJ, and Eni’s Agogo, all offshore Angola.

       “A potential initial public offering or strategic sale of around 25% of its FPSO holding company, planned for the fourth quarter of this year could unlock value for Yinson’s FPSO business and raise about RM2bil.

       “This, combined with the RM1.1bil to 1.2bil rights issue, can significantly reduce Yinson’s gearing, which we think will assuage investors’ concerns over this matter,” it said.

       CGS-CIMB has reiterated an “add” to its call on Yinson as it expects the group’s share price to re-rate once its rights issue is completed by mid-2022, with potential new FPSO contract awards in the last six months of this year.

       Yinson saw a 3% drop in its net profit to RM65mil for the fourth quarter ended Jan 31, 2022 from RM67mil in the previous year’s corresponding quarter, largely because of higher financing costs.

       Earnings per share fell in tandem to 6.1 sen from an earlier 6.3 sen.

       Yinson said its revenue for the period was down by almost 41% to RM741mil from an earlier RM1.25bil.

       The group declared a final single-tier dividend of two sen per share, payable on Aug 30.

       For the entire full FY22, Yinson’s net profit was up by 27.3% to RM401mil against RM315mil, a year earlier.

       In notes accompanying its results announcement to Bursa recently, Yinson said: “Global energy demand has been increasing and outstripping supply, causing strain on the global energy supply chain.

       “Even though demand for alternative energy sources such as renewables have surged, the outlook for oil and natural gas remains significantly strong over the longer term.”

       It said this had contributed to a steady rise in oil prices since 2021, with prices surging exponentially from February 2022 due to the geopolitical conflict between Russia and Ukraine.

       “Although the higher oil price encourages business activities within the oil and gas industry, the conflict is of economic concern.”