Yinson on track to chart higher earnings in FY18

Yinson’s headquarters in Johor Baru. The Petronas licences have given the company a fresh catalyst.

KUALA LUMPUR: Yinson Holdings is on track to chart higher earnings in FY18, having achieved first oil for its fifth floating production storage and offloading (FPSO) – FPSO John Agyekum Kufuor – in May 2017, said RHB Research.

It said on Wednesday that the consolidation of this FPSO and continuation of FPSO PTSC Lam Son would provide earnings growth in the near and mid-term. 

Over the longer term, FPSO Ca Rong Do is expected to start operations in the second quarter of FY20. 

The research house maintained its Buy call on the counter with a higher target price of RM4.51 as it rolls forward its valuation to FY19.

“After only two and a half years from the approval of the development plan, Yinson has achieved first oil for its FPSO John Agyekum Kufuor, in May 2017. 

“The FPSO would be deployed at Ghana’s Offshore Cape Three Points for a firm charter period of 15 years with a five-year annual extension option exercisable by Eni,” the research house said.

It also noted that Yinson had entered into a heads of agreement (HOA) with a consortium of Japanese investors for a proposed disposal of a 26% interest in FPSO John Agyekum Kufuor. 

The consideration is expected to be in the range of US$111mil and US$115mil, subject to adjustments and the contract. 

The divestment is expected to be finalised in early 2018 and will provide Yinson with about US$111 to US$115mil of cash.

“Over the short term, the full year consolidation of FPSO John Agyekum Kufuor should drive earnings growth in FY19. 

“Over the longer term, we believe the start-up of FPSO Ca Rong Do would ensure earnings growth visibility,” it said.