PETALING JAYA: CIMB Research has recommended Yinson Holdings Bhd
shareholders vote in favour of the proposed privatisation, describing the RM2.50-per-share cash offer as “fair and reasonable” and an opportunity to exit amid the group’s highly geared balance sheet.
It said Yinson’s financial position could constrain its ability to pursue future growth opportunities, particularly given its reliance on costly financing instruments.
Yinson had net gearing of 2.3 times as at July 2026, excluding RM4bil in redeemable convertible preference shares (RCPS) and RM1.9bil in perpetual securities, according to the research house.
CIMB Research said the group’s reliance on RCPS could also dilute the earnings benefits from new projects for ordinary shareholders.
“Further delays in securing new contracts and deploying the RM4bil in RCPS proceeds could prolong negative carry and weigh on earnings,” it noted.
Overall, the research house maintained its “hold” recommendation on Yinson but raised its target price (TP) to RM2.50 a share from RM2.26, in line with the proposed cash offer.
Last week, Yinson received a proposal from a consortium comprising MISC Bhd, Yinson Legacy Sdn Bhd (YLSB) – the investment vehicle of its executive chairman Lim Han Weng – and the Employees Provident Fund (EPF) to take the group private at RM2.50 per share.
The proposed offer values Yinson at about RM7.31bil, with a total cash consideration of RM4.03bil to acquire the remaining 55.2% stake, comprising 1.61 billion shares. Of the total consideration, MISC, a subsidiary of Petroliam Nasional Bhd, is expected to contribute about RM3.03bil for its 41.46% stake in the acquisition vehicle.
YLSB will also hold a 41.46% stake, while EPF’s wholly-owned subsidiary, Kwasa Layar Sdn Bhd, will hold the remaining 17.07%.
Yinson’s board is required to notify the consortium by Dec 4, 2026, whether it intends to recommend the proposal to shareholders.
Completion is targeted for the second half of financial year 2027 (2H27), following which Yinson will be wholly owned by the acquisition vehicle and delisted from Bursa Malaysia.
From MISC’s perspective, analysts are divided on the proposed acquisition, with some viewing it as an opportunity to expand its offshore production portfolio, while others warn of higher financial risks.
Hong Leong Investment Bank (HLIB) Research viewed the investment positively, saying it would strengthen MISC’s global floating production, storage and offloading (FPSO) presence and provide exposure to Yinson’s US$19.3bil order book.
The acquisition would expand MISC’s exposure to Yinson’s eight FPSOs and three floating storage and offloading (FSO) vessels, complementing its existing fleet of six FPSOs, five FSOs and one semi-submersible floating production system, it said.
HLIB Research sees potential operational and commercial synergies, while equity accounting would allow MISC to benefit from Yinson’s earnings without consolidating its debt.
It estimated that the RM3.03bil acquisition of a 41.464% stake, funded through 75% borrowings and 25% internal funds, would raise MISC’s net gearing to 0.23 times from 0.15 times.
“Nonetheless, we believe the increase in leverage remains manageable, supported by MISC’s relatively healthy balance sheet and cash reserves of RM7.2bil as at end-June 2026,” it said.
The research house maintained its “buy” call on MISC with an unchanged TP of RM9.22 a share, while keeping its financial year ending Dec 31, 2026 (FY26) to FY28 earnings forecasts unchanged pending further clarity on the proposed acquisition.
“Given the targeted completion in 2H27, we expect minimal earnings impact in FY27, with the full-year contribution from Yinson likely to materialise from FY28 onwards,” HLIB Research noted.
CGS International (CGSI) Research, however, cautioned that MISC may be paying a “steep” price for its stake in Yinson, potentially increasing the shipping group’s risk exposure.
It said MISC was likely seeking the investment to strengthen its offshore business, particularly in terms of contract scale, geographical reach, customer base and support infrastructure.
However, CGSI Research warned that Yinson was “very highly geared and its operational execution needs to be almost perfect for its shareholders to secure positive returns”.
Yinson’s net gearing would rise to 3.1 times if its perpetual securities and RCPS were reclassified as debt, the brokerage said.
It also highlighted Yinson’s lack of major new FPSO contract wins, which resulted in no engineering, procurement, construction, installation and commissioning revenue or profits in 1H27.
At the same time, CGSI Research said Yinson had issued US$800mil in RCPS out of its planned US$1bil issuance, with a substantial portion of the proceeds still unused.
The unused funds were resulting in negative carry, as the RCPS carry annual cash coupon rates of 12.95% under the first option or 7.25% under the second option, with deferred payments bringing the effective coupon to 13.5%, it explained.
These rates are “far in excess of any interest income that Yinson can earn,” it added.
Nevertheless, CGSI Research noted that Yinson had submitted bids for new FPSO projects, which could lift earnings through construction and subsequent operating revenue if secured and executed successfully.
The research house reiterated its “reduce” call on MISC with an unchanged TP of RM7.58 a share.
Given the high capital requirements and risks of the FPSO business, it suggested that MISC could have injected its existing offshore assets into Yinson in exchange for shares instead of paying RM3bil in cash.
“Alternatively, MISC could dispose of its offshore business and focus on its core shipping operations,” CGSI Research added.
