KUALA LUMPUR: Yinson Holdings Bhd’s exclusive negotiation with Enauta Energia SA for the potential supply and charter of a floating production storage and offloading (FPSO) unit comes as a good substitute following the cancellation of Petrobras’ bids for the Parque das Baleias (PDB) integrated project.
Last Friday, the company announced that its subsidiary Yinson Acacia Ltd had entered into a binding memorandum of understanding (MoU) with Enauta regarding the charter for the Atlanta field in Santos Basin, Brazil.
The MoU effectively kicks-start a framework agreement for the project, allowing Yinson to engage in the engineering works and commence financing negotiations.
The Enauta project does not come entirely as a surprise as Maybank IB Research noted that Yinson had highlighted this prospect in the past.
“Based on our preliminary assessment, we are positive on this project for it offers good returns on low capital expenditure (capex), which eliminates the need to do a cash call to fund this job,” the research house said.
Based on the limited information, Maybank estimated that this job could potentially generate RM1.7bil to RM2bil in net present value, which would lift its target price to RM8.15-RM8.50 per share (+23%-28%).
The estimated value for the job is based on the assumption of US$500mil-US$600mil (RM2.1bil-RM2.52bil) in capex, a 15-year charter, economic internal return rates of 18%-20% and a 9% weighted average cost of capital.
Presently, Maybank retained its “buy” call on Yinson with a target price of RM6.65.
Meanwhile, AmInvestment Bank pointed out that the stock currently trades at a bargain to financial year 2022 (FY22) price-earnings ratio of only nine times versus its five-year average of 21 times.
Given that it is a globally recognised FPSO player with a healthy balance sheet and strong prospects of substantively increasing long-term contracts to a formidable outstanding order book of RM40bil (US$9.7bil) currently, that translates to a robust 13 times FY22 revenue.
AmInvestment kept its “buy” recommendation on Yinson with an unchanged fair value of RM7.20 per share based on an ESG-adjusted sum-of-parts valuation.
Yinson now has prospects for five firm bids – Enauta, Limbayong (Malaysia), Pecan (Ghana), Cameia (Angola) and Maka (Suriname).
“Yinson could also be participating in Eni’s charter for a large FPSO with a production capacity of 120,000 barrels per day for the deepwater Agogo field, off Angola.
“Hence, the group is still well positioned to secure new projects over the longer term, given the limited number of FPSO players currently amid rising demand for such vessels globally.”