Kenanga Research has reiterated its “Outperform” recommendation Yinson Holdings Bhd with an SOP target price of RM7.35 and continues to like the stock as it is a market leader within the sector for transitioning to clean energy and setting clear targets for net-zero emissions, aligned with the Paris Agreement.
It said that against peers, Yinson’s carbon intensity even at current levels is already remarkably better at ~10-15kg CO2e/BoE, versus comparable international peers (e.g. SBM, Petrobras, BW Offshore) at ~15-20kg.
It said that its valuations have already factored-in assumptions of one potential large-sized FPSO contract win, and 15% share base dilution from potential fund-raising exercise.
It said that keen investors should also be wary of the counter’s potential exclusion from the Shariah compliance list in the upcoming November 2021 review.
On the risks to its recommendation among others outlined by Kenaga are failure to secure new contracts, project execution risks, refinancing risks, and termination of contracts in existing order book.
