• Yinson Holdings (Yinson) has entered into an agreement with Eni Angola S.p.A. (Eni Angola) to further extend the tenure of the agreement for preliminary activities (APA) from 20 February 2023 to 28 February 2023.

• Recall that Yinson earlier secured the APA worth US$218mil from Eni Angola to carry out preliminary activities for a floating production, storage and offloading (FPSO) unit related to the 1bil barrel deep-water Agogo field.

• This represents the second extension of the APA, mainly due to longer-thanexpected administrative process on the client’s end to finalise project details. Nevertheless, we believe Eni Angola is close to announcing the final contract award in the upcoming weeks, given the need to secure a vessel upfront amid the tight FPSO market currently.

• It is also worth highlighting that contract value for the APA was raised to US$310mil (from US$218mil previously), mainly to compensate Yinson for the delay in the schedule.

• The actual contract award (for bareboat charter plus operation & maintenance) could be worth at least US$5bil for a project tenure of 20 years (15-year firm period and 5 annual extensions). This implies a lucrative daily charter rate of at least US$685K, which would further uplift the group’s earnings outlook and currently contribute 81 sen or 21% to our sum-of-parts (SOP).

• We maintain BUY on Yinson with an unchanged SOP-based fair value of RM3.89/share, which also reflects a premium of 3% for our ESG rating of 4 stars given that the group is the first oil & gas service provider to invest in renewable energy assets proactively.

• The stock currently trades at a compelling FY23F PE of 16x vs. its 5-year average of 22x for a globally recognised FPSO player with a healthy balance sheet and multiple charter growth prospects across the globe amid limited operators that have adequate scale and financial resources.

Source: AmInvest Research - 21 Feb 2023