PETALING JAYA: The sale of Yinson Holdings Bhd
’s offshore support vessel (OSV) business to Icon Offshore Bhd for RM160mil will allow Yinson to focus on its core floating production, storage and offloading (FPSO) operations, while retaining exposure to the OSV market.
RHB Research is “neutral” on the deal, which will be satisfied through the issuance of 181.8 million new shares in Icon at 88 sen a share.
“The deal allows Yinson to streamline its businesses while retaining exposure in the OSV market as an associate.
“The domestic OSV market is still guided to be robust on the back of robust upstream activities and daily charter rates are at elevated levels due to vessel supply shortages and cabotage law effect,” the research house said.
The deal involved the sale of four OSVs, which contributed more than RM20mil to Yinson’s financial year 2023 (FY23) and FY24, but RHB Research expects the earnings loss from the disposal to be partially offset by contribution from Icon as an associate of Yinson.
Furthermore, the valuation offered by Icon was at a premium above the valuation of RM145 to RM153mil given for the four vessels by an independent valuer, the research house added.
The vessels have an average age profile of 13 years and are currently on charter contracts of one to three years.
The OSV deal is expected to be completed by Yinson’s fourth quarter when it will be able to recognise a gain on disposal of RM40mil and own a 16.2% stake in Icon.
RHB Research maintained its “buy” call on Yinson with a sum-of-parts derived target price of RM3.32 a share.
“We continue to like the stock for potential new project wins as its new projects are reaching the tail-end conversion stage.
“We also see potential monetisation of its FPSO units as a potential near-term catalyst for capital recycling,” the research house added.
