KUALA LUMPUR (Nov 16): Yinson Holdings Bhd has emerged as the second top gainer on Tuesday morning after securing floating production, storage and offloading (FPSO) contracts worth US$5.2 billion (RM21.7 billion) in Brazil.
The counter rose as much as 35 sen or 6.09% to RM6.10.
At 11.47am, the stock pared some gains at RM6.04, still up 29 sen or 5.04%.
At RM6.04, Yinson was valued at RM6.47 billion.
The counter saw 3.48 million shares traded.
Year-to-date, it has risen 3.78%.
Yinson announced on Monday that its indirect wholly-owned subsidiary Yinson Production Pte Ltd had been awarded two letters of intents (LOIs) by Petróleo Brasileiro S.A. for the provision of floating production storage and offloading facility Integrado Parque das Baleias (IPB FPSO) to be based in the North Campos Basin, Offshore Brazil, and operation and maintenance services during the charter phase of IPB FPSO.
Following the LOIs, Yinson Bergenia Production BV, a Netherlands-incorporated indirect subsidiary of Yinson, will enter into a charter contract for the provision of the FPSO, while Brazil-incorporated wholly-owned subsidiary Yinson Bergenia Serviços de Operação Ltda will enter into a contract for the asset’s operations and maintenance.
According to Yinson, the term of the charter is for a fixed period of 8,218 days or approximately 22.5 years from the date of final acceptance.
The job is expected to commence operation by the fourth quarter of 2024.
Yinson also said the contracts are expected to contribute positively to the group’s earnings and net assets per share.
Maybank Investment Bank Research analyst Liaw Thong Jung said in a note on Tuesday he is positive about the contract win and maintained a "buy" call on the stock.
According to Liaw, the contracts will raise Yinson weighted average lease expiry period to 21 years (versus 20), contributing about US$172 million (RM715.61 million) or US$84 million (RM349.48 million) to US$107 million (RM445.17 million) to the group’s earnings before interest, taxes, depreciation and amortisation (EBITDA) or net profit per annum.
“Yinson’s latest deal is a much-improved version of its previous ones. It is also comparatively better than Marlim 2, which has led us to raise our sum of parts-based target price by 6%,” said Liaw, who raised the target price for Yinson to RM11.55 from RM10.90.