KUALA LUMPUR: Shares of Yinson Holdings Bhd were slightly higher on Bursa Malaysia this morning with the earlier-than-expected project commencement announcement for the floating production storage and offloading (FPSO) Abigail-Joseph, Nigeria.
In its note today, RHB Research said the transportation and logistics company did not require any funding for the project, as the total capital expenditure would be funded from its client’s upfront cash payment, in the form of a prepaid lease payment in one lump sum.
“Thus, its counterparty risk has been reduced to minimal levels, with the only project execution risk remaining during the FPSO conversion period.”
“We also took comfort in the fact that the project utilises FPSO Knock Adoon as the donor vessel, which requires minimum project complexity,” it said adding, the earnings forecast for Yinson had been upgraded post adjustments with FPSO Abigail-Joseph’s commencement date, and higher FPSO Lamson charter rates as guided.
Yinson has upgraded its financial year 2019 and financial year 2021 forecasts by 10.4% and 22.1% respectively , as it imputed an earlier contribution of earnings from FPSO Joseph Abigail and stronger joint venture earnings.
It also assumed stronger charter rates for FPSO Lamson after guidance from management of its interim contract.
RHB Research has maintained a “buy” call on Yinson with a target price of RM5.54, an improvement of 25% from RM4.45 recently.
At 11.38 am, shares of Yinson rose three sen to RM4.48. — Bernama
