KUALA LUMPUR (March 29): CIMB IB Research has maintained its “Add” rating on Yinson Holdings Bhd at RM4.59 with a higher target price of RM5.89 (from RM5.29) and said Yinson’s FY1/19 core net profit of RM182 milion was in-line with Bloomberg consensus, but 9% below house forecast, due in part to weaker associate contributions.

In a note March 28, the research house said it previously had factored in RM1.16/share value of potential contract wins into its SOP-based target price.

“In this report, given more clarity on the ongoing bids, we raiseour target price to factor in a higher RM2.04/share value from two potential new contract wins, calculated based on 70% share of the value of the Pecan FPSO and one of the three Brazilian FPSO bids, on the assumption of a 10-11% project IRR.

“Given the size of these new potential projects, the key downside risks are overstretching of engineering and project management resources, project execution delays and cost overruns.

“We are giving Yinson the benefit of the doubt in this regard,” it said.

CIMB Research said key potential rerating catalysts include the smooth execution of the ongoing Helang FPSO and Abigail-Joseph FPSO projects, which are expected to be commissioned at their respective offshore fields by Nov 2019F, and winning bids for the new projects described above.