Kenanga, CIMB Maintain ‘Buy’ On Yinson After US$600 Mln Vietnam Contract

KUALA LUMPUR, July 29 (Bernama) -- Kenanga Investment Bank Bhd and CIMB Securities Sdn Bhd have reiterated their “Buy” calls on Yinson Holdings Bhd after it secured a contract worth around US$600 million to provide and charter a floating storage and offloading (FSO) vessel in Vietnam. (US$1=RM4.21).

Yinson, via its joint venture PTSC South East Asia Pte Ltd, was awarded the contract by Vietnam’s Phu Quoc Petroleum Operating Company for the offshore Block B field in southwest Vietnam.

In a filing with Bursa Malaysia yesterday, Yinson said the contract involves the provision, charter, operation and maintenance of the FSO vessel for an initial term of 14 years, with an option for a further extension of up to nine years.

“The total contract value, including the possible extension, is estimated at around US$600 million.

“The FSO vessel will support gas production in the area, which aims to supply 5,073.5 million standard cubic metres of gas per year to customers in the Ca Mau and O Mon power complexes,” it said.

Kenanga said it views the contract positively. Based on an assumed US$200 million capital expenditure and a 9.3 per cent discount rate, it estimates a discounted cash flow accretion of one sen per share.

“The expected earnings contribution is minimal at RM13 million, or around three per cent of our forecast profit after tax for the financial year ending 2026.

“Given Yinson’s established track record in Vietnam and the use of a familiar shipyard, previously used for FPSO Lam Son, we see limited execution risk. We also assume the project will be fully internally funded, given its modest scale and the JV structure,” it said in a note today.

The investment bank maintained its ‘Buy’ call with an upgraded target price (TP) of RM3.16 per share.

Meanwhile, CIMB Securities described the award as a strategic win that reinforces Yinson’s position as a leading independent offshore asset owner and operator.

“Once operational, Yinson is set to benefit from a steady, recurring income stream from the Block B FSO. We estimate the project could yield an internal rate of return of 9.3 per cent,” said CIMB Securities in a note.

CIMB Securities reaffirmed its ‘Buy’ rating on Yinson, with a TP of RM2.93 per share, underpinned by solid long-term earnings visibility from its US$19.6 billion order book (including potential extensions), which stretches through to 2048.

At 10.36 am, Yinson was three sen lower at RM2.36, with 894,000 shares traded.

-- BERNAMA