• Yinson secured FPSO Parque project from Petrobras worth US$5.2bn for a 22.5-year firm lease-and-operate contract. This implies average DCR of USD630k/day.
• The company is looking to raise fresh funds worth c.RM1.0- 1.2bn via rights issue to finance the project.
• We raise our FY22F/23F/24F earnings forecast by 8%/77%/38% to account for the new contribution from this project.
• Maintain TRADING BUY with higher SOP-derived fully-diluted TP of RM7.90 that implies 12x FY23F PE. We think this project win is yet to be fully reflected in its share price.

Finally secured FPSO Parque from Petrobras

Yinson announced that it secured the lease-and-operate contract for FPSO Parque to Petrobras for approximately 22.5 years with first oil expected in 4QCY24. The contract value is worth c.USD5.2bn which will boost its orderbook by c.33% to USD15bn. Based on the contract value, this implies daily charter rate (DCR) of USD630k/day.

To raise fund via rights issue for the project

Total capex for this project is estimated to be c.USD900m which will be funded by a combination of debt and equity at 70:30. To fund its equity portion, the company intends to raise fresh fund through a rights issue that is worth c.RM1-1.2bn.

Earnings upgrade

Management guided that FPSO Parque will be classified as finance lease asset with the EPCIC profits to be recognised over the construction period (see Table 1). As such, we raise our FY22F/23F/24F earnings forecast by 8%/77%/38% (Table 2) to account for the new contribution from the FPSO.

Outlook remains robust

Demand for FPSO projects remain strong with 10 new projects could be sanctioned in 2022. The company’s outlook remain robust as competition remains limited; both SBM and Modec are almost fully occupied as the companies are currently working for 5 projects concurrently. The company, on the other hand, has only 2 FPSOs (FPSO Anna Nery and Parque) on order. Besides this, it still has 1 contract yet to be finalised (i.e. FPSO Atlanta Ph 2 with Enauta offshore Brazil) and 1 outstanding bid (Aker Energy’s FPSO Pecan).

Maintain TRADING BUY with higher TP RM7.90

Maintain our TRADING BUY on the stock with higher fully-diluted TP of RM7.90 (from RM6.30) (Table 3) which implies 12x FY23F P/E. We think this project win is yet to be fully reflected in its share price.

Source: BIMB Securities Research - 16 Nov 2021