Analysts tie Stonepeak's Yinson interest to FPSO boom

New Straits Times

4 hours ago

KUALA LUMPUR: Stonepeak Partners' interest in Yinson Holdings Bhd may stem from surging global demand for floating production storage and offloading (FPSO) vessels, which, according to Energy Maritime Associates, is projected to top US$88 billion over five years, analysts said.
The New York-based infrastructure investor is reportedly in exclusive talks to acquire Yinson, potentially valuing the Malaysian energy infrastructure firm at up to RM9 billion, making it one of the country's largest deals this year.
On June 6, reports emerged that Stonepeak is in exclusive discussions to buy out Yinson, citing sources familiar with the matter. The deal involves collaboration with the Lim family, Yinson's founder and largest shareholder, which held a 26.6 per cent stake as of May 30, aiming to take the energy infrastructure firm private.
Analysts see the deal as a strategic fit. Stonepeak's focus on infrastructure-backed, cash-generating assets aligns with Yinson's core FPSO business, which includes long-term contracts across Africa, Asia, and South America.
The acquisition would also expand Stonepeak's presence in Asia-Pacific energy infrastructure, an analyst told Business Times on condition of anonymity.
However, Yinson has clarified that it is not in discussions with any third party in respect of a buyout exercise.
Executive chairman Lim Han Weng said the company is currently engaged in exploratory talks with various parties on potential corporate proposals related to its shareholding.
"However, given that the discussions are still at an exploratory stage, there is currently no conclusive indication that the discussions would give rise to a corporate proposal involving Yinson," it said in a filing to Bursa Malaysia on Monday.
Crown jewel
The FPSO business is the crown jewel of the Lim family empire. Yinson, controlled by founder Lim Han Weng and son Lim Chern Yuan, is currently the second-largest FPSO operator globally.
"The Lims have built Yinson into a well-oiled money machine. They have transformed Yinson into a highly efficient and profitable operation, making it an attractive takeover candidate," the analyst said.
Lim (Chern Yuan) revealed in an April Forbes interview that Yinson plans to bid for three mega-FPSO projects, worth at least US$1.5 billion each in that period. While he did not disclose details of the bid, Maybank Investment Bank analyst Jeremie Yap believed they could be in Ghana, Ivory Coast and Malaysia.
Yap wrote in a March research note that given Yinson's track record, it is well positioned to win future projects and could be a preferred choice for the bids.
Meanwhile, CIMB Research Sdn Bhd said that the RM9 billion valuation translates to RM3.23 per share, a 38 per cent premium over Yinson's last close of RM2.34 and 10.2 per cent above the research firm's target price of RM2.93.
If confirmed, this could pave the way for a privatisation offer, the firm said in a note.
Yinson's shares have declined 23 per cent over the past year, partly due to the post-tariff market downturn. Following news of the potential buyout, Yinson's share price jumped 13.8 per cent on June 6, its largest single-day gain since 2019, narrowing year-to-date losses from 33.7 per cent to 11.4 per cent and lifting its market capitalisation to RM6.5 billion.
CIMB highlighted that the exclusive negotiations indicate advanced discussions involving the Lim family. Stonepeak's interest aligns with its strategy to invest in infrastructure-based, cash-generating assets with long-term contracts, characteristics exemplified by Yinson's FPSO business.
"This deal would also help Stonepeak increase its exposure in Asia Pacific energy infrastructure, where Yinson has already established a solid and growing footprint. However, Yinson has declined to comment, stating that the information remains unverified," CIMB said.
Yinson's portfolio includes a solid project backlog valued at US$20.5 billion and eight active FPSO contracts. Its growing footprint in emerging markets, along with energy transition initiatives such as solar and battery storage, supports the premium valuation. Stonepeak would gain deeper access to the Asia-Pacific energy infrastructure sector through this acquisition.
CIMB noted that Yinson's FY24 price-to-earnings (P/E.) ratio of 9.5x, though higher than the industry average of 8.2x, is justified by its scale, strong project pipeline, and exposure to energy transition. For comparison, peers SBM Offshore and Modec trade at 4.8x and 11.6x, respectively.
Stonepeak is expected to value Yinson's strategic growth in FPSO contracts, especially after Yinson's recent efforts to strengthen its financial position, including raising US$1 billion in January 2025 from a consortium of institutional investors, and growth in its renewable energy segments, CIMB said.
The US$1 billion funding round included top investors such as Abu Dhabi Investment Authority, British Columbia Investment Management, and RRJ Capital, supporting both FPSO expansion and the renewable energy portfolio.
Despite a 22 per cent drop in net profit to RM752 million for FY2025, due to higher financing costs and lower engineering revenue, CIMB forecasts stronger results ahead, particularly with the Agogo FPSO expected to start production by September.
CIMB maintains its Buy rating on Yinson, with a target price of RM2.93 and earnings estimates for FY2026–2028. Potential catalysts for re-rating include contributions from FPSO projects Maria Quiteria, Atlanta, and Agogo, alongside possible asset monetisation and privatisation.
Risks remain, including possible delays or cost overruns in FPSO projects and ongoing losses in the green technology segment.