Quick take: Yinson slides after Petrobras postpones project

Maybank Research downgraded Yinson to Hold and cut the target price to RM5.45. The previous target price was RM7.20.

KUALA LUMPUR: Yinson’s share price fell to a low of RM4.88 in early Monday trade after Petrobras has decided to postpone the Parque Das Baleias (PDB) project by one year, pushing back the first oil production to 2024.

At 9.21am, it was trading at RM5, down 43 sen. There were 1.40 million shares done.

The FBM KLCI rose 6.15 points or 0.41% to 1,509.99. Turnover was 1.28 billion shares valued at RM538.51mil. There were 399 gainers, 209 losers and 375 counters unchanged.

Maybank Investment Bank Research said the postponement was due to the: (i) economics difficulties due to the Covid-19 pandemic and (ii) reduction in gas export curves involving the field.

Petrobras has consequently cancelled the initial tender calling for the FPSO (handling 100k bpd oil and 5m mmscfd of gas) and authorised the start of a new bidding process.

Recall that Yinson was the sole qualified tenderer during the bidding stage, having submitted the lowest bid for the tender, and has been in negotiations with Petrobras for over a year on this.

Maybank Research downgraded Yinson to Hold and cut the target price to RM5.45. The previous target price was RM7.20.

“We expect a knee-jerk reaction to share price owing to the unexpected loss of the Petrobras PDB project. We have cut our target price by 25% and D/G Yinson to a HOLD, removing the PDB impact.

“That said, we view this as a temporary setback. It still has an equal chance to win the rebid.

“Without PDB, its financials are also healthier (i.e. lower capex, no cash call) and Yinson may potentially declare higher dividends. It will also offer greater focus/ resources to its energy transition project(s), ” it said.

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