PETALING JAYA: Shares of marine support services provider Yinson Holdings Bhd
rallied following the proposed entry of Datuk Mokhzani Mahathir-linked Kencana Capital Sdn Bhd as a substantial shareholder.
The stock added a hefty 46 sen, or 14%, to RM3.81 yesterday, charting a new all-time high. Yinson had surged as much as 18% during the day to RM3.94.
It was a top three gainer across the local bourse with 2.1 million shares traded.
Yinson had proposed last Friday to issue and place out new shares to Kencana Capital at RM2.82 each, to be paid for in cash. The new shares would not exceed 15% of Yinson’s enlarged share capital of 220.4 million shares.
The exercise allowed it to finance potential acquisitions of business entities or assets that it was currently identifying, Yinson said.
Industry sources opined that the move by Kencana Capital might pave the way for a Dayang Enterprise-Perdana Petroleum style partnership between Mokhzani’s SapuraKencana Petroleum Bhd and Yinson, which not too long ago ventured into the capital-intensive floating production, storage and offloading (FPSO) arena.
They also pointed out that Yeow Kheng Chew, a shareholder and director of Kencana Capital, was Mokhzani’s long-time business partner as well as SapuraKencana executive director and head of treasury and corporate finance.
Despite being Malaysia’s largest oil and gas firm by market value, FPSO capability is still a missing piece in SapuraKencana’s arsenal.
Analysts say the oilfield services giant, with a market capitalisation of RM25bil, intends to leverage on Yinson’s experience in this area.
This would be a better arrangement than getting SapuraKencana to take on more debt, especially after its massive RM9bil purchase of Seadrill Ltd’s 18 tender rigs was approved in April, industry insiders explained.
Yinson has had a working relationship with the pre-merger Kencana Petroleum Bhd, one example being the RM33mil contract they secured to provide offshore support vessel services in Vietnam to Petronas Carigali Vietnam Ltd.
In a text message to StarBiz, Mokhzani said: “Kencana Capital is an investment holding company that continuously looks at investments into listed and non-listed entities.
“We are subscribing for shares in Yinson to provide a capital base for them to explore further opportunities. Yinson is a clean, small company with interests in trading, logistics, ports and floating, storage and offloading vessels.
“This is independent of SapuraKencana. Kencana Capital is in real estate development and is a cornerstone investor in IHH Healthcare Bhd, Astro Malaysia Holdings Bhd as well as other medium to long-term investments.
“Nothing that conflicts with SapuraKencana, which is still my mainstay in oil and gas.”
Yinson had signed a pact last June with Petrovietnam Technical Services Corp (PTSC) worth US$737.3mil (RM2.28bil) to provide an FPSO vessel with up to 10-year bareboat charter to Lam Son, a joint venture between Petroliam Nasional Bhd and PetroVietnam. Yinson has a 49% share in the deal and PTSC the rest.
While Yinson’s FPSO, to be built at a cost of US$400mil (RM1.24bil), is on a long-term charter in Vietnam, an industry source said the company could use the monies raised from the placement and top that up with borrowings to acquire other FPSOs whose values have been heavily written down.
Such a vessel could cost between US$200mil (RM620mil) and US$300mil (RM930mil), versus the usual price tag of US$400mil (RM1.2bil) to US$1bil (RM3.1bil). These ships are already available in the region, according to analysts.
In a note to clients, Kenanga Research said it was “pleasantly surprised” by the news of Kencana Capital’s entry, coming as it did just days after a separate placement was fixed on May 22.
“Cumulatively, the two fund raising exercises will raise around RM165.5mil, just enough to fund Yinson’s equity portion for another floating production project. To recap, Yinson’s Lam Son FPSO has not been launched as yet.
“We believe this share issue could be a game changer for Yinson as the involvement of Kencana Capital could hint at a Malaysian project. Thus far, Yinson’s business is mainly in Vietnam.
“We estimate that the share issue will lead to potential interest cost savings of RM3.1mil per annum but it will cause quite a fair bit of dilution in our fiscal 2013 to 2014 earnings per share numbers of 10.3% and 11.7%, respectively. However, we believe that any new project will likely more than compensate for these dilutions,” the brokerage added.
Limited time offer:
Just RM5 per month.
