• Yinson was selected to supply an FPSO to Enauta following a tender bid involving Altera, BW Offshore and Ocyan. The lease charter contract is expected to be finalized by 1QCY22.
• We estimate that this contract will boost its firm orderbook by 20% to USD11.5bn and enhance its fair value by RM1.00/share or 16% to RM7.30/share.
• Maintain TRADING BUY on Yinson with unchanged TP of RM6.30. Atlanta FPSO is the first project win in almost 2 years after it last secure FPSO Marlim back in 4QCY19. We think this will provide the much needed fresh catalyst to boost the stock price.

Selected for FPSO Atlanta Phase 2 job

Yinson announced that it entered into an MoU with Enauta to supply an FPSO to the latter’s Atlanta field at Santos basin, Brazil. It was selected following a tender bid involving several contractors including Altera Infrastructure, BW Offshore and Ocyan. While the lease charter contract has yet to be finalized, we understood that engineering works and procurement of long lead items already started. The company is looking to finalize the contract by 1QCY22.

Background of the project

The Atlanta field is a producing field with production level around 30k bpd and it contains 2P oil reserves of more than 100Mbbl. The oil is currently produced using an early production system (EPS) via Petrojarl FPSO which is expected to last for another 2.5 years. Upon completion, the new FPSO will replace existing EPS at the field for a 15+5 years charter with higher oil production rate of 50k bpd.

No change to earnings forecast

Management expects that the contract value for this project to be worth at c.USD1.6-2bn. We estimate that this will boost its total outstanding orderbook by c.20% to USD11bn and enhance its fair value by c. RM1.00 or 16% to RM7.30/share. Notwithstanding, we keep our forecast unchanged at this juncture.

Maintain TRADING BUY with TP RM6.30

Maintain our TRADING BUY recommendation with unchanged TP at RM6.30 (Table 1) which implies 12x FY22F P/E. Atlanta FPSO is the first project win in almost 2 years after it last secure FPSO Marlim back in 4QCY19. We think this will provide the much needed fresh catalyst to boost the stock price.

Source: BIMB Securities Research - 30 Aug 2021