Yinson tendering for up to six projects for FY18

KUALA LUMPUR: Yinson Holdings Bhd, which is disposing of a 26% stake in its floating production storage and offloading (FPSO) unit in Ghana, is bidding for up to six projects for the financial year ending Jan 31, 2018 (FY18).

“We continue to try to win projects at the right price but also at the right terms. We have to manage the risks of each project. We won one project for the year so far and there is huge focus on the delivery of these assets at the moment,” its group CEO Lim Chern Yuan told reporters after its AGM and EGM yesterday.

He said it will continue to bid for jobs in its core geographical areas, namely Asia and Africa, but declined to disclose the value of its tender book.

Commenting on the outlook for the FPSO market, Lim said while many of its peers have weakened significantly in financial stability due to the low oil price environment, Yinson has strengthened its balance sheet and achieved new highs in its order book and cash levels.

“In the FPSO business, unlike other parts of the sector, increasingly we see fewer players. We don’t see many new players coming in at the global scale. Keep in mind that to do this business there are a few factors, you need a track record, strong technical capabilities, balance sheet to finance the project. So you need quite a big set-up,” he said.

Although demand has softened due to the low oil price environment, Lim said, oil prices have been more stable over the last one year, which enables its clients to plan their developments.

“I think it is range-bound. We do see more bids than before when oil prices initially went down, there were not many projects up for bidding. After we won Ghana, for two years there were no projects awarded. We do see projects starting to be awarded again,” he added.

Lim said Yinson’s new partners from Japan would also hopefully provide the group with access to more markets and a bigger fleet of vessels as well as better financing to strengthen its position.

The group has an order book of US$3.7 billion (RM15.9 billion), which will keep it busy for 20 years. Cash and bank balances as of Jan 31, 2017 stood at RM633.92 million.

On Monday, the group announced it signed a heads of agreement with a consortium of Japanese companies comprising Sumitomo Corp, Kawasaki Kisen Kaisha Ltd, JGC Corp and the Development Bank of Japan for the disposal of a 26% stake in its FPSO unit in Ghana named FPSO John Agyekum Kufuor. The value of the stake in Yinson Production (West Africa) Pte Ltd is estimated between US$104 million and US$117 million.

Lim said the board will decide how to use the proceeds from the disposal, whether to reinvest to grow the business or to develop a more stable dividend policy.
“The consideration for dividends has always been a balance between growth and keeping a stable policy,” he stressed.

Yinson’s share price ended slightly higher at RM3.66 yesterday on 1.36 million units traded, giving it a market capitalisation of RM3.96 billion.