PETALING JAYA: Yinson Holdings Bhd is likely to lose its syariah-compliant status on Bursa Malaysia to finance its project known as floating production storage and offloading (FPSO) JAK, according to CGS CIMB Research.
“Yinson plans to draw down the new, non-shariah complaint US$800mil loan in February 2020, to pay off the current US$618m shariah-compliant loan, with the excess of US$182mil to be distributed to FPSO JAK’s shareholders in proportion to their shareholdings.
"Once drawn down in February 2020, Yinson will no longer be shariah compliant as the ratio of conventional borrowings to total assets will exceed the 33% threshold," it said in a report yesterday.
However, for the May 2021 review, Yinson will likely retain its shariah-compliant status, based on its annual report for the year ending January 31, 2020, since the annual report for the year ending January 31, 2021 will not likely be available for review by the Securities Commission.
"Yinson will likely lose its shariah status in the Securities Commission’s November 2021 shariah review, as its annual report ending January 31, 2021 should be available by that time," said CGS CIMB.
CGS CIMB pointed out that Yinson’s earnings in the coming years would be driven by its FPSO Helang in Sarawak and FPSO Abigail-Joseph in Nigeria.
Notably, its FPSO Helang is currently operating in Block SK10, offshore Miri, Malaysia, and is the group’s maiden entry into the Malaysian offshore oil and gas market.
“Beyond this, Yinson’s recently-won FPSO Marlim-2 offshore Brazil will contribute to earnings from early-2023, ” it said.
It reckoned that the value of all three projects has been reflected in Yinson’s current share price.
Notably, shares in Yinson had done very well in the past one year, rising more than 52% to traded at RM6.36 apiece.
“However, the share price does not yet reflect the fact that Yinson is the likely winner of two more significant FPSO contracts such as the Parque das Baleias inBrazil, and the Pecan contract in Ghana, both of which we expect Yinson to be awarded this year and worth RM3.54 per share to the sum-of-part, ” CGS CIMB said.
For the third quarter ended Oct 31,2019, Yinson’s net profit rose 24% to RM53.97mil from RM43.4mil in the same quarter a year earlier attributed to favourable foreign exchange, net reversal in impairment loss on trade and other receivables and lower impairment loss on property, plant and equipment.
Revenue for the period stood at RM240.97mil, a 9.3% decline from RM265.58mil previously.
Did you find this article insightful?