KUALA LUMPUR: The prospects of Yinson Holdings Bhd remain positive, supported by the robust floating, production, storage and offloading (FPSO) sector over the next 12 months, according to several brokerages.

       The energy infrastructure company has been awarded two letters of intent (LoIs) by Petroleo Brasileiro S.A. (Petrobras) for a FPSO vessel in the North Campos Basin, in offshore Brazil.

       The LoIs were for the charter, operations and maintenance of Integrado Parque das Baleias (PDB) FPSO.

       Maybank IB Research said the FPSO business is booming, with demand stronger than the pre-Covid-19 crisis level.

       “Unlike 2019, many tenders now are only able to attract single bids due to higher degree of difficulty in securing financing and the limited capacity by FPSO operators to take on new jobs.

       “This dynamic situation offers these operators strong leverage during negotiation talks, with the enviable position of being able to pick and choose projects. The PDB is a clear testament to this,” it added.

       The research house said Yinson has the capacity to take on the two jobs without the risk of straining its balance sheet unlike its peers.

       Similarly, UOB Kay Hian Research continued to like Yinson for its execution, which is a key factor to ensure debt payback in the risky oil and gas business, although it still excludes the non-oil and gas projects from its valuation.

       “The market has not fully priced in any material near-term FPSO contract win catalysts or the long-term value of the non-oil and gas venture,” it said.

       As such, UOB Kay Hian Research kept a “buy” call on Yinson with sum-of-the-parts (SOTP) target price of RM7.60, implying a 22 times price-to-earnings ratio for the financial year ending Jan 31, 2022 (FY22) forecast. Meanwhile, Nomura Securities has raised FY23 and FY24 forecasts net profit by 48% and 15% respectively as it incorporates engineering, procurement, construction and commission income from financial lease accounting for FPSO PDB.

       “We also raise our SOTP-derived target price to RM8.40 from RM7, as we incorporate the PDB FPSO and RM1.2bil rights issue into our valuation model,” it said.

       By end-year, Yinson would do a rights issue of RM1.2bil largely to cover the equity portion for the PDB FPSO project.

       For future projects, Nomura Securities said Yinson is eyeing four more FPSO projects in the medium term including Pecan by Aker Energy in Ghana, Block 31 Project by BP in Angola, Cameia by Total in Angola and Maka by Total in Suriname.

       “Yinson is targeting only the operation and maintenance for the Pecan project, while the Block 31 project will likely be a redeployment, implying that both these projects do not require significant capital,” it added.