KUALA LUMPUR (Nov 16): Nomura Securities has maintained its "buy" rating on Yinson Holdings Bhd at RM5.75 with a higher target price (TP) of RM8.40 (from RM7) after incorporating Yinson's engineering, procurement, construction and commissioning income from financial lease accounting for floating, production, storage and offloading (FPSO) facility.
On Monday (Nov 15), Yinson said it had been awarded two letters of intent (LOI) by Petróleo Brasileiro S.A. for the charter, operations and maintenance of Integrado Parque das Baleias, an FPSO vessel in the North Campos Basin, offshore Brazil.
Nomura said it also raised its SOTP-derived TP to RM8.40 (from RM7), as it incorporated the FPSO and RM1.2 billion rights issue into its valuation model.
“With 46% upside potential, we maintain our 'buy' rating. We value each project based on DCF (WACC: 6.9%).
“The stock currently trades at 8.9x FY23F EV/EBITDA vs the historical average of 9.7x,” it said.
Nomura said according to management, Yinson is considering four more FPSO projects in the medium term (next two years): Pecan by Aker Energy in Ghana (may be awarded in 2022), Block 31 by BP in Angola (likely to be awarded in 2022), Cameia by Total in Angola (likely in 2023), and Maka by Total in Suriname (likely in 2022).
It said Yinson is targeting only the operation and maintenance for the Pecan project, while the Block 31 project will likely be a redeployment, implying that both these projects do not require significant capital.
At 10.55am, Yinson rose 4.35% or 25 sen to RM6, valuing it at RM6.6 billion.