STOCK FOCUS OF THE DAY
Yinson Holdings : Red Emperor and the Ghana fillip BUY
We maintain BUY on Yinson Holdings (Yinson) with a higher sum-of-parts based fair value of RM3.97/share (from an earlier RM3.90/share), which implies a FY18F PE of 16x. Our higher valuation stems from a 26% increase in the NPV for the Ca Rong Do (Red Emperor) floating production storage and offloading (FPSO) vessel as its capex has been officially confirmed as US$648mil vs. our earlier assumption of US$500mil.
This raises the Ca Rong Do FPSO's contribution to Yinson's SOP to RM394mil, or 36 sen from an earlier estimate of 29 sen. Yinson formally entered into a consortium agreement yesterday with PetroVietnam Technical Services Corporation (PTSC) to jointly undertake bareboat charter for FPSO for Repsol's Talisman Vietnam 07/03 B.V, targeted to commence in August 2019 after the vessel's conversion.
In a separate development, Yinson's wholly-owned Ghana-based FPSO vessel, named John Agyekum Kufuor, has achieved first oil 3 months ahead of schedule from its earlier deadline in August this year. Hence, we have raised FY18F net profit by 31% for the 8 months' additional earnings contribution vs. our earlier 5-month assumption. Our FY19F-20F earnings are unchanged as the US$1bil FPSO would already have been fully operational. Given Yinson's locked-in earnings visibility with an order book of US$3.7bil (23x FY18F revenue), the stock currently trades at a bargain CY18F PE of 14x vs. over 20x for Dialog Group and Bumi Armada.
Prestariang : UniMy moves closer to break even BUY
Tune Protect : Take-up rate for travel insurance to recover in 2H17 BUY
UMW Oil & Gas Corporation : Expect lower 2Q-3Q losses HOLD
Econpile Holdings : Lands RM48.5mil piling job for office building HOLD
KL Kepong : Manufacturing earnings held up in 2QFY17 HOLD
Lafarge Malaysia : 1QFY17 hurt by weak sales volume and ASP HOLD
Unisem : Investment in new packaging technologies required to reignite growth HOLD
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