Bonus issue completed; rights issue next
? Yinson’s stock traded ex-bonus (1-for-1 bonus) on 12 Apr 2022, which we
reflect in our core EPS forecasts and SOP-based TP at RM3.95.
? Reiterate Add as we expect the share price to rerate once its rights issue is
completed by mid-2022F, with potential new FPSO contract awards in 2H22F.
? Rerating catalysts include a potential IPO of the FPSO business in 4Q22F.
Bonus issue completed yesterday
In order to raise funds for its FPSO Maria Quiteria (MQ) project, which will be deployed in
the Parque das Baleias (PDB) fields offshore Brazil by late-CY24F, Yinson announced
that it intended to 1) undertake a 1-for-1 bonus issue; 2) raise RM1.1bn-1.22bn in
proceeds from a rights issue to fund the equity portion of the FPSO MQ capex; and 3)
issue warrants in order to raise RM800m-850m. The first part of the proposal is now
completed, with Yinson’s shares trading ex-bonus yesterday. For more details about the
Maria Quiteria and other FPSO projects and bids, please refer to our 30 Mar 2022 report.
Capital raising to be completed by mid-2022F
Other elements of the capital raising exercise are still a work-in-progress but Yinson
expects everything to be completed by late-Jun or early-Jul 2022F. The bonus, rights and
warrants issues were already approved by shareholders via an extraordinary shareholder
meeting (EGM) on 29 Mar. The issue price of the rights will be at a 25-45% discount to
the theoretical ex-rights price (TERP) based on the 5-day volume weighted average
market price of Yinson shares, up to and including the date prior to the price fixing date.
The exercise price of the warrants will be set at a c.10% premium over the TERP. The
warrants are exercisable to new Yinson ordinary shares over a validity period of three
years. The Lim family, which owns a combined 27.53% stake in Yinson’s equity, has
given irrevocable undertakings to subscribe for their respective entitlements to the rights
issue. The remaining 72.47% of the rights will be fully underwritten by investment
bank(s). Yinson’s share price has been weak since it first announced on 20 Dec 2021 its
intention to execute a rights issue as we believe that investors in Yinson have had to
reduce their holdings in the company in the past few months in order to make room to
participate in the upcoming rights issue. Once the rights issue is completed, we think that
Yinson’s share price could recover as the rationale for selling is no longer present.
Multiple rerating catalysts
Furthermore, several FPSO contracts are likely to be awarded in 2HCY22F, three of
which Yinson is gunning for, i.e. TotalEnergies’s Cameia, BP’s SE-PAJ, and Eni’s Agogo,
all offshore Angola. A potential IPO or strategic sale of c.25% of its FPSO holding
company, planned for 4QCY22F, could unlock value for Yinson’s FPSO business and
raise c.RM2.2bn. This, combined with the RM1.1bn-1.22bn rights issue, can significantly
reduce Yinson’s gearing, which we think will assuage investors’ concerns over this
matter. Downside risks: execution slip-ups on its multiple ongoing and upcoming projects.