AmWatch - Yinson Holdings : Secures licences from Petronas HOLD, 13 Nov 2014

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Yinson Holdings : Secures licences from Petronas              HOLD

Yinson Holdings announced yesterday that its 30%-owned associate company, Yinson Energy Sdn Bhd, has been awarded three licences by Petronas. The three licences are for floating offshore facilities, mobile offshore facilities and naval architecture and marine engineering. Based on a news report by The Edge Financial Daily, Yinson Energy’s other shareholders are Rozlan Md Taha and Iftisham Abdul Aziz.

The licences would provide Yinson with a new source of income, which can now directly tender for works relating to floating production, storage and offloading  (FPSO) vessels, floating storage and offloading (FSO) vessels, and mobile offshore production units (MOPU) for Petronas and other oil and gas companies/operators in Malaysia. Having said that, we do not expect Yinson to secure jobs within Malaysia anytime soon, as project rollouts have been delayed and slowed down recently amid the falling oil price environment. We note that Bumi Armada, which is the fifth largest FPSO player globally, does not operate any FPSO vessel in Malaysia currently.

Catalysts for the group stem from additional FPSO contracts which the group is currently bidding for, which are overseas, in West Africa and Southeast Asia. Management had earlier indicated that the result of a large FPSO tender is likely to be revealed by year-end, while small-to-mid-sized projects would be known next year. Recall that the group has recently signed a MoU with Golden State Petro to buy a Samsung-built 309,000DWT very large crude carrier Ulriken, which was built in 1998. The FPSO is likely earmarked for the Sankofa-Gye Nyame field under the Offshore Cape Three Points (OCTP) license at Offshore Ghana. We maintain our HOLD call with an unchanged fair value of RM2.97/share.

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