Two FPSO wins for a MYR9.45 TP, BUY
Winning 2 FPSO jobs in Brazil is a major possibility, based on various news flows. Yinson could also end up with 3 wins (+1 in Ghana); a realistic target considering the robust tendering activities and capacity tightness in the market. Our SOP-based TP incorporates two new wins, of USD1b capex each. Yinson is our top pick for the FPSO play.
A technical win on Parque das Baleias’ FPSO?
According to the Editorial Brasil Energia article, the Bluewater-Saipem consortium has been disqualified from Petrobras’ Parque das Baleias (PDB) aka ‘Whale Park’ FPSO tender. That means Yinson is the sole bidder and should win this tender on technical default, assuming it complies with all the necessary requirements. Recall that the bid narrowed to a two-horse race, between Yinson and Bluewater-Saipem consortium. The PDB FPSO offers a 22-year firm charter, with a 2022 delivery deadline with no local content requirement.
Two FPSO job wins in Brazil a high possibility
That, coupled with Upstreamonline’s recent newsflow, which articulated that Petrobras had entered talks with both SBM and Yinson for the charter of Marlim 1 & 2 FPSOs (each awarded one FPSO job), means Yinson could end up with two FPSO wins in Brazil, a positive. Establishing a new market enhances its franchise value/visibility and consolidates its future bids prospects there. Brazil is a key FPSO market with a strong tender pipeline (8 tenders for 2020-21).
Not ruling out a “3-peat win” scenario
With the market tightening, we posit that Yinson could potentially end up winning three jobs (2 in Brazil and 1 in Ghana; Aker’s Greater Pecan tender). Greater Pecan is also a two-horse race with SBM. Our MYR9.45 SOP-based TP is unchanged, which incorporates 2 job wins (USD2b capex size). To sum up, Yinson is most leveraged to win multiple jobs this year vis-à-vis its peers worldwide. Key risks are: (i) execution and (ii) access to capital.
Source: https://factsetpdf.maybank-ke.com/PDF/142715_CN__92c6177497b34b28ac9c0406e4c11ba2.pdf?
