News Yinson has fixed the issue price for its
private placement of shares at RM1.70/share.
Recall that on 6th
April 2012, the company had announced that it was proposing a private placement
exercise of up to 12m shares.
Comments The
price is similar to the issue price that the company indicated in its initial
announcement for the private placement. Hence, there is no significant change
to the view mentioned in our previous initiation report (dated 10 April 2012)
onthis exercise.
The private placement
will raise RM20.4m and boost the share base by 6.3% to 200.4m shares (from
188.4m shares).
Proceeds will mainly
be used for acquisition of fixed assets and repayment of its creditors. In our view,
the new funds will only be sufficient to fund the company’s port development
expenses since another floating production unit requires another sizeable
funding exercise.
The exercise is
expected to be completed by 2QFY12.
Outlook We
foresee a 3-year net profit CAGR of 29.7% for the company and like management’s
prudent policies with regards to its expansions and project selections.
Given its close
working relationship with Petrovietnam, we view it as a proxy to floating production
opportunities (3 currently) from the burgeoning Vietnamese market
Forecast Estimated
dilution to FY13-15E EPS forecasts will be around 5.1-5.5%, due to the increase
in the share base.
Rating MAINTAIN OUTPERFORM
Valuation Our
Sum-of-Parts (SOP) fair value is now RM2.25, post placement (RM2.29 pre
placement). Risks 1) Significant
reliance on Petrovietnam could result in a lack of jobs if the relationship
sours, 2) high capex requirements for the industry could strain the balance
sheet and 3) contractual and project execution risks from its floating
production unit business.
Source: Kenanga
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