• Stay BUY, with new MYR3.04 TP from MYR3.06, 22% upside. Yinson proposed to undertake a private placement, entailing the issuance of 120m new shares (4.1% of total issued shares). We are neutral on the private placement as it is needed for continuous expansion in the renewable energy (RE) and green technology space. We do not discount the possibility of further fund raising in the longer run should there be any sizeable new project within these segments.

• Proposed private placement. Yinson proposed to undertake private placement, entailing the issuance of 120m new shares (4.1% of total issued shares). The issue price is fixed at MYR2.36/share, which is a 4.9% discount to the 5-day volume weighted average market price (VWAP). It is targeted to be completed by 2QCY24.

• For RE and green tech business. The proposed placement is expected to raise gross proceeds of MYR283.2m. Bulk of the proceeds (89.4%) are targeted to be utilised for expansion of its RE and green technology division and the remaining 9.9% is for working capital purposes. We understand that it will be used to fund the RE project in Peru. Recall that Yinson has completed the acquisition of the 97MWp Matarani Solar project in Peru, which has been contracted through a power purchase agreement for 15 years. The project is currently under construction and is expected to enter commercial operations by 3QCY24. Besides this project, there are more projects to be kickstarted in the pipeline. Meanwhile, the capex allocation for green technology will be mainly for EV infrastructure deployment as well as construction of electric vessels. The capex commitment could be <MYR100m.

• We are neutral on the private placement as it is needed for continuous expansion in the RE and green technology space. We do not discount the possibility of further fund raising in the longer run should there be any sizeable new project within these segments. We maintain our earnings estimates but SOP-based TP inches lower to MYR3.04 from MYR3.06 (including a 2% ESG premium) after incorporating the impact of such exercise. Global FPSO demand remains robust and Yinson is comfortable to secure another project once either of the projects reach the tail-end conversion stage. We continue to like the company for its exponential growth trajectory (41% 3-year CAGR), backed by the maiden contribution from three upcoming vessels while continuing its aggressive venture into green technology and renewables. Downside risks: Unable to win new jobs and contract terminations.

Source: RHB Research - 21 Mar 2024