Grab Yinson now!
There are similarities Yinson’s share price performance with CMSB, Press Metal - to name a few. What does that mean is the share price can hit multiple times of RM10 level even after share price consolidation. The strong share price performance is due to solid fundamentals, well- managed balance sheet and cash flow, and backed by a good management.
What can be concluded here is Yinson is expected to announce winning 2 FPSO jobs in Brazil based on various news flows. It will be announced anytime soon. With current stable oil price and positive outlook given by latest OPEC’s extension production cut pact, it should trigger the tender to be concluded soon.
Do we know when? It could be today, tomorrow, next week... but the important thing is, these 2 jobs very big and lucrative. Is that possible the share price to hit LIMIT UP?
Yinson is technically secured Marlim and Parque das Baleias FPSO projects in Brazil after 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.
A price evaluation sheet for the tender showed that Yinson came out on top for the FPSO with production capacity for 80,000 barrels per day of crude and 7 million cubic metres per day of natural gas, due to start producing in 2022.
Quality-wise, the returns from these tenders will likely be higher (mid- teens) vis-à-vis its existing portfolio, which is not a surprise considering the robust tenders pipeline and capacity tightness in the market now. Looking back, its FPSO JAK project yielded a project IRR of 10%-11%.
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.
Rising Brazilian FPSO demand and limited supply gives more bargaining power to Yinson for higher charter rate. Against this backdrop, each Brazil project orderbook size could be worth c.US$6.0bn. This will more than triple the company’s existing orderbook to US$17bn from US$5bn.
The market has not fully reflect the potential contribution from 2 Petrobras’ project. The fact that analysts have also conservatively imputed lower charter rate of USD550 rather than current market rate of USD670-700. But Maybank is the only one use current charter rate for now.
Maybank’s SOP-based TP of RM9.45 incorporates two new wins, of USD1b capex each. Yinson is top pick for the FPSO play.
https://klse.i3investor.com/blogs/investsmartway/213065.jsp
