Tuesday 16 Jul 2024
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KUALA LUMPUR (Nov 10): CGS-CIMB Securities has maintained its “add” rating of Yinson Holdings Bhd at RM2.11, with a higher target price (TP) of RM3.34, and said it sees the energy infrastructure and technology company bagging Eni SpA’s Agogo floating production, storage and offloading (FPSO) charter contract.

In a note on Wednesday (Nov 9), the research house said the award of the Agogo charter contract, likely in December, is a key potential rerating catalyst for Yinson.

CGS-CIMB said it expects Eni to award the FPSO Agogo project to Yinson, with Yinson already identified as the preferred bidder for the project offshore Angola.

The research house estimated the time charter rate of the Agogo to be more than US$750,000 (RM3.53 million) a day, and could be a source of significant cash flows once the FPSO begins production from mid-calendar year 2026 (CY2026).

It said that by comparison, the time charter rates of the FPSO Anna Nery (AN) and FPSO Maria Quiteria (MQ) projects are "only" above US$600,000 a day, since the capital expenditure for both projects are lower at about US$1 billion each, and with longer charter durations of 25 years (AN) and 22.5 years (MQ).

“If Yinson secures the Agogo award, the project execution team that was previously managing the already-completed AN project will manage the Agogo project.

“Note that our earnings per share (EPS) forecasts and TP have not included the Agogo contribution yet,” the research house said.

CGS-CIMB also said investors will also be rewarded with strong earnings growth over the next 18 months.

“We forecast FY2023 (financial year ending Jan 31, 2023) core EPS to rise 19% year-on-year (y-o-y) due to the recognition of profits from the MQ and Atlanta FPSO projects, which already started in the first half.

“We expect FY2024 core EPS to rise another 96% y-o-y (more than doubling from FY2022), driven by the start of AN finance lease contributions from early CY2023, which is just three to four months away.

“Also, we have already factored into our forecasts our expectations that the FPSO Adoon time charter contract will eventually be extended for a further five years from October,” it said.

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