Good day all,

My name is Philip. For those who have followed my investment portfolio posted publicly online, one of the biggest portions of my portfolio is in PCHEM, which as time has passed by is definitely doing well over the last 3 years (44% up since my last time buying, with a average investment of 17 million, market value of 25 million today, and 2 million in dividends received).

https://klse.i3investor.com/servlets/pfs/120720.jsp#tabs_group2

so, in all fairness, for a safe boring stock very good, with more growth to come.

However, as neglected as it is, my second largest investment holding is actually in Yinson, which is  21% of my portfolio, and 11.6 million ownership. Sadly, the growth over the last 3 years has been quite slow, due to a few challenges faced by yinson. (delay of order, cancellation of projects). However, I believe it will soon be about to change.

Let me set the stage.

Notice how the orderbook ties up very nicely with the revenues of the company. And how they are investing the extra cash into new FPSO projects around the world.

GUESS what will happen in 2023, and 2024? DO YOU HAVE THE PATIENCE TO INVEST IN THE STOCK MARKET? 

DEC 2021

https://yinson.irplc.com/medianews.htm?filepath=YINSON/2021.12.20%20Yinson%20awarded%20Enauta%20FPSO%20project%20FINAL.pdf

NOV 2021

https://www.yinson.com/highlights/Yinson-awarded-Integrado-Parque-das-Balaeias-FPSO-project-in-Brazil/

Just by listening to the interview above we come to a few very clear basic details. CY Lim is a very conservative and safe manager, not taking bad deals, and geting the highest charter rates in the market. They have 99% production uptime, a long 26 year history of success (including their fred olsen norweigen acquisition), and use that to build on their value proposition in picking up long term FPSO contracts at very good rates.

And now based on their history of success, their ability to grow capital and their project pipeline, we now see a 15.33 billion USD (60 billion ringgit) FIRM orderbook with a call option to increase that to 16.8 billion that lasts all the way until 2048 (25 year contract for petrobras). Having an orderbook that long can be bad and good, bad if managed improperly ( like armada north sea project), good if managed properly (huge penalty for early cancellations, huge clarity of long term growth).

that 60 billion ringgit order book, if yinson does nothing with it (ignore their india 190MW solar farm project at nokh which costs around 300m to produce, with a 1.5 billion 25 year PP agreement, on top of their existing 140MW bhadla solar farm at the same area which cost them 25 million usd to purchase, https://renewablesnow.com/news/malaysias-yinson-takes-majority-control-over-140-mw-of-indian-solar-assets-711100/), yinson will be looking at a 50% gross profit margin, or 30 bil ringgit, more than enough to pay for the loans and bills taken up in the past few years (7billion+ and counting). For a steady and boring energy like yinson, clarity of cash flow earnings is the most important thing for investors like me. (please note all the numbers are guesstimates and not exact to the dollar, although the contract details are open for the public to see).

So we come to this: they are raising 1.22 billion, to pay for the new fpso enauta, maria and anna nery completion in 2023/2024. The last time they had a rights issue, this is what happened:

https://www.klsescreener.com/v2/stocks/announcement/7293/7066

They completed 4 FPSOs and grew profits from 40 million a year to 400 million. Market cap jumped almost 100 fold over the last 12 years, and the business itself became the 6th biggest FPSO company in the world.

Today, they are asking for more, and willing to have rights issue to go along the ride.

I will definitely be putting in more money in this.

For me at my age and risk appetite, I much prefer putting money into a business that has an orderbook 25 years into the future (fixed rate for solar farms, fixed rate for FPSO charter) where I know exactly how my cash flow is coming, how much is going, where it is coming from and how it is being spent. YINSON, QL, PCHEM, HARTA all offer very clear long term prospects in terms of production clarity (with clarity going up 5-10 years ahead on production figures, as their capacity is always driven by demand). As such, they are becoming more vertically integrated, with long term growth and huge cash warchest to build on their moat.

boring business indeed.

The simple fact is investing in FPSO, there is a ship conversion time of 2 years. So basically, any contract that is procured and agreed upon today, takes 1 year to confirm, and another 2 years to deploy, before you see the ongoing results. Its a bit like building oil rigs, except movable and reusable. So like how CY lim says it, todays work will only be seen 2- 3 years from now.

I have been a shareholder in yinson since 2012, and have held on buying recently since 2019 due to the cancellation of the FPSO contracts from south american players due to the oil price uncertainty. However now with the oil price as it is today, it is definitely a compelling time to start buying the O&G players.

However, do you buy those cyclicals and bottom end players like sapura, armada, or go to the speculative ones like dayang, hibiscus, carimin with their non fixed orderbook? or go to the spread players petron, hengyuan etc?

For me the rules are still the same. Find the companies with strong cash positions, have good profits in bad times, and good profits in good times, nothing too speculative, vertically integrated, long orderbooks and a history of outperformance.

Dialog, Pchem, yinson, petgas, dagangan, those are all asking for a fair price in this market cycle, with a good backup support. For me, yinson is what I understand best, as it is a very very simple business at heart.

Just FPSO charter of USD500K per day. 5 year - 25 year contract.

O&M optional, but sold separate and only for good contract prices.

Fixed earnings, fixed profit margins that depend on having a high uptime length. Good management, professionaly managed (not by skin color but by performance capability).

My Favourite type of company,

This is the easiest part, take each FPSO, find the uptime, the contract period, the length of time, the contract type (O&M, or bareboat charter only), times with the duration, and that is your clear cash flow moving forward. Just like how you would buy a bus/lorry, and calculate how much money you can make per trip, and times per year. Simple, easy calculations. And with their 26 year history of dependability and the risk of accidents being low due to good management, you will know exactly how much money Yinson will make in the next 10-20 years. IF they don't reinvest the profits into more renewables, FPSO contracts, and other profitable projects. Who knows what the young man with full support from his family will do next?

You can see from the way he talks, his proven actions, his ability in getting profitable contracts, and his long term strategy that he has plan, he is working along that plan, and he is not doing silly things that would ruin his fathers legacy. Just the kind of manager you would want working under you.

For those who were wondering why I bought Yinson many years ago in 2012, this was why.

https://www.bfm.my/podcast/morning-run/the-breakfast-grille/yinson-lim-chern-yuan

I was driving to westports, and was listening to this bfm broadcast on the radio. I managed to find it again many years later on the BFM website, and I think his character and his strategy for the company still remains the same. I find it refreshing that he hasn't changed much, and I would be plying more investments into yinson once I have more news of his impending rights issue.

https://www.theedgemarkets.com/article/yinson-plans-rights-issue-raise-rm122b-also-proposes-oneforone-bonus-issue

Good things to see for the future post contract.

Hope everyone makes a good profit this year and for many years ahead,

Always buy what will go up tomorrow!

Captain Philip Enauta