Hot Stock Yinson rises 1.5% after recent FOP acquisition

by **Cals** Tue 25 Feb 2014, 17:19

Hot Stock Yinson rises 1.5% after recent FOP acquisition

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Tuesday, 25 February 2014 11:46

KUALA LUMPUR (Feb 25): Yinson Holdings Bhd was among top gainers on the stock exchange today, after positive comments by analysts following its recent FOP acquisition.

At 11:20am today, the stock rose 13 sen or 1.5% to a high of RM8.63 per share with 166,400 shares traded

Some analysts are positive about the company’s recent acquisition of Fred Olsen Production (FOP), a Norwegian based offshore floating production petroleum company.

Maybank IB, which has re-initiated a “buy” call on the company with a target price (TP) of RM10.10 per share, said the FOP acquisition would contribute significantly to its earnings

The research house expects the acquisition to contribute about RM42 million per annum to its earnings.

Analyst Liaw Thong Jung commented: “This further provides Yinson with the opportunity to move into the mid-segment FPSO space and alleviates single customer/country risk (i.e. Vietnam).

"Financially, we expect this acquisition to contribute about RM42 million per annum to earnings,” he said.

Liaw noted that the company is currently tendering for six projects of which two are Africa-based.

“Bagging a new FPSO job outside Vietnam is a major re-rating catalyst, which would consolidate its Top 10 position in the market...

"Based on its historical track record, adding another small-sized FPSO could drive up earnings by RM100 million–RM120 million per annum," he said.

Kenanga Investment Bank said it has a “hold” call on the stock with a TP of RM7.32 because Yinson’s near-term catalysts had been priced in.

“Yinson’s floating production operations will continue to have a strong presence in Vietnam; and now boosted by the FOP fleet, it will have an enhanced geographical presence.”

“We are downgrading our call on the stock given that near-term catalysts are already priced-in at this juncture, in our view.

"Having said that, we are inclined to change our view should there be more incoming projects post the corporate exercise,” said the research house.