If the probability of one FPSO failing to obtain final acceptance is 25%. Probability of exactly one FPSO failed to obtain final acceptance out of Yinson`s total 4 new FPSOs using the binomial probability formula is about 42%.
In summary Yinson is taking a very high risk on over expansion.
The FPSO operators should think out of the box. The current build and lease business model is extremely high risk and requires huge capital commitment.
large upfront capital costs, long project timelines, complex engineering, and potential for operational challenges in remote and harsh environments. After the project completed then wait for the mercy of FPSO charter to sign the final acceptance. At the mercy of FPSO charter to give charter rate based high KPI. At the mercy of FPSO charter to give contract extension or terminate the contract during low oil price crash period.
Armada sterling V waited few months still no news of final acceptance. The delay actually caused by field owner or oil field geography challenges. FPSO operator just have to accept all these unforseen challenges.
You should read Oakland Path's report and some other IB's report. Ignore IB target price, read the content. Quoted from Oakland Path report:
The company has experienced several contract terminations in the past decade, and it has received termination fees in each case. Here is a summary of the terminated contracts:
- FPSO Lam Son - The FPSO was originally supposed to be leased until June 2021, but the lease was terminated early in April 2017 due to lower production levels than expected. Yinson was paid termination fees. The client continued to charter the FPSO to work at the same field at a lower day rate. The FPSO has recently been extended until June 2024, with an automatic 6-month extension until December 2024. - FPSO Knock Allan – The FPSO was originally supposed to be leased until April 2019, but the lease was terminated in late 2018. It had previously operated for nearly 10 years in the Olowi Field in Gabon for Canadian Natural Resources before the field ran dry. Yinson was paid the termination fees. The FPSO was upgraded and redeployed as FPSO Abigail-Joseph to Nigeria under First E&P in 2020 on a firm seven-year contract. - Repsol’s Ca Rong Do – In 1Q18, Yinson’s JV PTSC Ca Rong Do was notified by Repsol of a force majeure event (Vietnam’s territorial dispute with China). The upgrading contract for the vessel has yet to be awarded at that time. Yinson's JV has finalized a full compensation deal for the contract termination in 2020. - FPSO Pecan Letter of Intent (LOI) – Aker Energy and Yinson entered a letter of intent (LOI) for the provision of an FPSO vessel for the Pecan field. However, the LOI was terminated in early 2020 due to the COVID-19 pandemic and low oil prices. Yinson has been compensated for the work that was already completed.
In two of the four cases, Yinson was compensated for the termination of existing leases, and in the other two cases, it was compensated for the termination of contracts for vessels under construction. This shows that Yinson has chosen its counterparties carefully and that its contracts are well-written, with strong provisions for termination.
When most of the counters in Bursa are bullish now, you have the funny feeling that Yinson is going to be listless for the rest of the year. The chart has been shitty for a long time. Wait and wait and wait. Perhaps a few more qtrs of good result might change people's perception.
yinson is one of the companies that seems happy running its business with not a worry on its share price..... recently issued a very very expensive sukuk at 7.5% coupon.... while everyone nows in a year of less Feds will reduce the rates and we will be at the usual 3.5% ish rates, this like while running normal business instead of going to SMI loans ..... one opts for ah long.... same money yes.... but one charges high borrowing cost; but like said touch wood.... all yinson contract shoftfalls have been compensated for....BTW ang moh runs the core business at yinson.... just like at bumi armada
How sure are you the fed will lower the rates? If they lower now before inflation subsides, they risk causing another spike in inflation. If anyone can successfully predicts fed movement, he will be the richest man on earth.
Anyway, FPSO Atlanta will probably reach the Atlanta field in the coming days. Maybe first oil in 1 or 2 months? FPSO Maria will reach the oil field in 1 or 2 months time. So, the be end of this year, only left FPSO Agogo under construction.
@BursaVulture .... of course the Feds will lower the rates, only question of when, as otherwise US and most economies will go into a recession, which is what UK is on the brink off and thats why UK and EU will probably drop first.... we are looking at least 25 basis points reduction by this year end, followed by 100 basis points or so in 2025.... educated guesstimate... for yinson's sake the Brent better wake up from its 80 slumber and move towards 90 .... at 80 there is little incentive for FPSO owners
Yinson Holdings Berhad KLSE: YINSON OverviewCompareFinancials 2.39 MYR -0.13 (-5.16%)year to date 10 May, 5:00 pm MYT • Disclaimer
Bumi Armada Bhd KLSE: ARMADA OverviewFinancialsCompare 0.58 MYR +0.07 (15.00%)year to date 10 May, 5:00 pm MYT • Disclaimer (Peer comparison)
Dayang Enterprise Holdings Berhad KLSE: DAYANG OverviewFinancialsCompare 2.66 MYR +1.06 (66.25%)year to date 10 May, 5:00 pm MYT • Disclaimer (OTB ex-lover banyak cantik)
Uzma Bhd KLSE: UZMA OverviewFinancialsCompare 1.23 MYR +0.48 (64.00%)year to date 10 May, 5:00 pm MYT • Disclaimer (Crown Prince of OnG stocks)
Dialog Group Bhd KLSE: DIALOG OverviewFinancialsCompare 2.48 MYR +0.42 (20.39%)year to date 10 May, 5:00 pm MYT • Disclaimer (Nice recovery from bottom)
Wasco Bhd KLSE: WASCO OverviewFinancialsCompare 1.48 MYR +0.48 (48.00%)year to date 10 May, 5:00 pm MYT • Disclaimer (This guy doing Yinson`s Agogo FPSO top side module contract now)
Some see the glass as half empty other half full. So do you see opportunity in Yinson since its share price not yet moving but with two addition FSPO in operation in 2025 and one addition FSPO in operation come year 2026.
Yinson charter rates are fixed. Oil up or down dont affect them. It is like signing a long term rental contract at fixed monthly price. I dont know why you guys kept saying oil up and yinson must go up. Kenanga got a report on which counter benefit or lose the most when oil price is up or down.
If oil up, pchem is one of the top winner in bursa. Oil up or down, dont affect yinson at all.
Yakah? Theoretically no impact to Yinson`s performance. Practically the FPSO charter will find reason to terminate the contract or give FPSO operators a lot of headaches during oil price down time. You check correlation between Yinson share price with global oil price?
Posted by BursaVulture > 5 minutes ago | Report Abuse
Yinson charter rates are fixed. Oil up or down dont affect them. It is like signing a long term rental contract at fixed monthly price. I dont know why you guys kept saying oil up and yinson must go up. Kenanga got a report on which counter benefit or lose the most when oil price is up or down.
If oil up, pchem is one of the top winner in bursa. Oil up or down, dont affect yinson at all.
In the last five financial years, Yinson’s debt level has ballooned by more than four-fold.
IT is no secret that Yinson Holdings Bhd has been piling on borrowings to fund its projects, but with total debt crossing RM16bil or more than double its market capitalisation, the indebtedness issue has become too glaring for shareholders to ignore.
The fact that the group sits on negative operating cash flow and that nearly 90% of its debt is US dollar-denominated have also added further concern.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
kl_guy
1,398 posts
Posted by kl_guy > 2 days ago | Report Abuse
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who got contact with yinson ceo . pls update him that ev charge are not working. is all over the fb .