Hot Stock Yinson gains 2% on Fred Olsen acquisition

by **Cals** Tue 11 Jun 2013, 12:09

Hot Stock Yinson gains 2% on Fred Olsen acquisition
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Tuesday, 11 June 2013 11:43

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KUALA LUMPUR (June 11): Yinson Bhd rose on the logistics firm's proposed acquisition of Norway-listed Fred Olsen Production ASA (FOP).

At 10:48 am, Yinson shares were up 10 sen or 2.1% to RM4.86. The counter pared gains from the day's high of RM5.15 with a trading volume of 2.44 million.

The stock changed hands at RM4.85 at 11.29am.

Yinson announced yesterday a proposed conditional takeover of Norway's FOP in a transaction valued at 995.74 million Norwegian krones (RM551.34 million). On a per-share basis, the purchase translates into RM5.20 apiece.

FOP and its subsidiaries own and operate a fleet of three floating, production, storage and offloading (FPSO) vessels. One of the vessels is owned on a 50:50 joint venture, in the international oil and gas markets.

With this new development in Yinson, Kenanga Investment Bank raised its target price for the company to RM5.73 from RM3.78. Yinson remains an "outperform".

A note from the Kenanga today said Yinson's purchase of FOP is "a sizable undertaking" and "an attractive buy".

Kenanga analyst Cezzane See said the acqusition price of FOP translates into a price-to-book valuation (PBV) of 0.7 times. This is a discount to Norwegian peers Sevan Marine and BW Offshore's forward PBV of 1.1 times and 2.5 times respectively.

According to See, Yinson's management has indicated that while FOP has made net losses, they were mainly due to non-recurrent write-downs.

"We believe this purchase will lift Yinson's capabilities as an FPSO player given that it will be inheriting a seasoned international management and (Yinson's) geographical presence as FOP's FPSOs are in currently in Nigeria and Gabon.

"The company is also targeting charter rate upsides; as one contract is up for renewal by 2014 and (Yinson's) management believes the redeployment at market prices to be possible," See said.