KUALA LUMPUR (Jan 31): Kenanga Research has maintained its “outperform” rating for Yinson Holdings Bhd at RM2.55, with a higher target price (TP) of RM3.47, after the company acquired the 97MW Matarani solar project in Peru, secured with a 15-year power purchase agreement.

In a note on Wednesday, the research house said the anticipated annual contribution is around RM16 million, with an expected internal rate of return of 8%.

Kenanga said it continues to favour Yinson due to: i) a strong floating production storage and offloading (FPSO) order book pipeline, with multiple major FPSO jobs under the conversion stage providing significant earnings growth in coming years; ii) a strong project execution track record, which positions the company to benefit from strong structural demand for FPSO contractors anticipated in the coming years; and iii) it being one of the first local oil and gas companies investing in green technology companies (solar, e-mobility and so on), which would help with the company’s long-term energy transition agenda.

“We increase our sum-of-parts-based TP by 1% (seven sen per share) following the inclusion of the Matarani solar project, assuming 10% weighted average cost of capital and an 80% earnings before interest, taxes, depreciation, and amortisation margin.

“Note that our TP reflects a 5% premium accorded by a four-star ESG (environmental, social and governance) rating as appraised by us,” it said.