The research house said the forecast reflects higher engineering, procurement, construction, installation and commission contributions from floating production storage and offloading (FPSO) Atlanta and Agogo.
It said that its sum-of-parts target price (TP) is raised by 4% to RM3.79 from RM3.65 and maintained its “outperform” call for the energy infrastructure and technology company.
Moving forward, Kenanga said it is positive on the group for its significant earnings growth from a strong FPSO order book pipeline with multiple major projects under the conversion stage.
It also likes Yinson for its strong project execution track record which positions it to benefit from strong structural demand for FPSOs as well as it being one of the first local oil and gas companies to invest in green technology companies (solar, e-mobility, etc).
However, the risks to Kenanga’s call includes crude oil prices falling below hurdle rates for floating production projects, regulatory risks, and uncertain returns for renewables investments in emerging markets, and project execution risks including cost overrun, delays and downtimes for FPSO assets.
Potential near-term project win
Yinson has circa five outstanding bids for new FPSO projects, which include TotalEnergies’ Maka (Suriname), BP’s Block 31 SE-PAJ (Angola) and Petrobras’ Albacora (Brazil).
The robust market underpins the strong pipeline, where the group expects 13 FPSO awards over the next 12 months. The majority of the projects comprise large FPSOs with capex exceeding US$1 billion each.
Yinson reported a higher revenue of RM3.11 billion for the second quarter ended July 31, 2023 (Q2 FY2024) compared to Q1 FY2024’s revenue of RM3.02 billion.
Meanwhile, RHB Investment Bank Research (RHB IB) maintained its “buy” rating for Yinson at RM2.48, with an unchanged TP of RM3.06.
It expects stronger earnings for the second half ending Jan 31, 2024 (H2 FY2024), driven by the FPSO Anna Nery’s contribution and the Nokh Solar Park project.
“We continue to like Yinson for its exponential growth trajectory (41% three-year compound annual growth rate) backed by the maiden contribution of three upcoming vessels, while continuing its aggressive venture into green technology and renewables.
Yinson’s share price ended 1 sen or 0.4% higher at RM2.49, giving it a market capitalisation of RM7.6 billion.