STOCK IN FOCUS
Yinson Holdings : Massive war chest primed for new FPSO charters BUY
We maintain BUY on Yinson Holdings (Yinson) with a higher sum-of parts (SOP) fair value of RM5.05/share (from an earlier RM4.50/share), which implies an FY19F PE of 17x.
Although our earnings forecasts are maintained, our SOP expansion stems from: 1) Incorporating an extension of the group’s 49%-owned Lam Son floating production storage and offloading (FPSO) vessel charter by another 7 years but at a discount of 40%; 2) Adding the Layang FPSO’s NPV of RM395mil, assuming a capex of US$350mil; 3) Forex conversion rate lowered to RM4.00=US$1 from an earlier RM4.30=US$1;
If Yinson secures the charter for the US$1bil FPSO for Hess’ Tano-Cape Three Points project off Ghana by the end of the year, Yinson’s SOP can be raised further by 35% or RM1.79/share. Even if Yinson does not secure this new Ghana FPSO project, there are multiple other FPSO charters up for grabs, predominantly in Brazil.
Other report
Plantation Sector : News flow for week 15 – 19 January NEUTRAL
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