RHB Research said Yinson has the capacity to win at least one more project by the first half of next year.
PETALING JAYA: Yinson Holdings Bhd
’s new contract to supply a new floating storage and offloading (FSO) vessel to Murphy Oil Corp’s wholly owned subsidiary, Murphy Cuu Long Bac Oil Co Ltd for the Lac Da Vang (LDV) field off Vietnam, is forecast to have an internal rate of return of 9% over the tenure of the contract.
CIMB Research said estimated that the returns from the project are not expected to have a substantial impact on Yinson’s bottomline or valuation.
The capital expenditure for the FSO is estimated at US$225mil, with Yinson having an effective stake of 49% and joint venture (JV) partner PetroVietnam Technical Services Corp (PTSC) the rest.
“We project profit contribution from the JV to range from RM5mil to RM20mil a year over the 15-year contract (10 years with the option for another five years),” the research house forecast. It added that the contract’s total value is up to US$416mil.
The FSO is expected to start operations off Vietnam in the fourth quarter of 2026. Funding for the construction of the FSO will be undertaken with capital contribution from the client, according to CIMB Research.
The research house stated the LDV field development contract is Yinson’s first contract with Murphy Oil.
Yinson is now also bidding for a floating production, storage and offloading (FPSO) contract for the Paon oil and gas discovery in the Ivory Coast which is under Murphy as well.
RHB Research said Yinson has the capacity to win at least one more project by the first half of next year and the research house said it sees the potential monetisation of the FPSO units as near-term catalysts for capital recycling.
“FPSO contractors will continue to command pricing power, backed by constrained yard capacity amid robust demand while cost pressures remain a major challenge,” the research house said.
CIMB Research maintained its “buy” rating on Yinson with an unchanged sum-of-parts based target price of RM3.16 a share.
It identified re-rating catalysts as the successful delivery of first oil from the FPSOs Maria Quitéria, Atlanta and Agogo, as well as a potential asset-value unlocking exercise before the end of this year.
RHB Research also kept its “buy” call on Yinson but upped its target price to RM3.31 a share from RM3.29.
