KUALA LUMPUR: Yinson Holdings Bhd, an oil and gas (O&G) support services player and port operator, will be cautiously optimistic on investment next year where asset acquisition will be largely based on new long-term contracts despite a bullish outlook for the sector.

Executive director Lim Chern Yuan said the company was very clear on its investment strategy and contract selection and would engage only in long-term business with steady income stream.

“Currently, we have structured quite a defensive business model against the uncertainty in the world economy.

“Our orderbook of RM1.25bil should be able to carry us forward as the first contract in the orderbook will only expire in three years,” he toldStarBiz.

The bulk of the orderbook came from its RM1.01bil 20-year charter contract to provide a floating, storage and offloading (FSO) facility via 49:51 joint venture with PetroVietnam Technical Services Corp (PTSC), which would begin in 2013.

In September, Yinson and PTSC, had agreed to jointly provide the FSO on a bareboat charter basis and the latter would charter it to Bien Dong Petroleum Operating Company.

PTSC parent company is PetroVietnam, a 100% state-owned entity that is authorised to deal with all petroleum-related matters in Vietnam.

In June, Yinson secured a RM75mil service contract also from PTSC for the provision of offshore support vessels.

Lim said the company was not resting on its laurels as it was also bidding for more long-term oil and gas FSO and offshore support service (OSV) contracts in the Asean region, including in Malaysia, Indonesia and Vietnam.

“We are currently bidding for RM800mil worth of jobs, including the FSO and FPSO (floating production, storage and offloading). We got more than 30% winning chances as there are not many players in the services market.

“For example, there are only three players, including us, in Malaysia that offer FSO and FPSO services,” he said.

In terms of investment, Lim said Yinson said: “Every asset that we buy must be backed up with a long-term contract. This will make our growth slower than other players but at the end of the day, our growth will be more steady,” he said.

Yinson other long-term bet is port business.

The company recently acquired a 40% stake in a new deepwater bulk port in the south of Vietnam, PTSC Phu My Port for RM26.4mil cash.

“The port has a lot of potential to be expanded with our capital injection. We plan to gradually increase the capacity of the port from the current 2.5 million tonnes a year.

“The prospects are also quite bright as Vietnam is a developing nation,” Lim said.

He added that the port was one of a handful natural deepwater ports Vietnam.

“Our neighbouring ports in the area, Hutchison and PSA, which are sharing the same water frontage, are long-term players that have been doing well. Thus, we expect to perform the same too,” he said.

Going forward, while Yinson investment would only be based on contracts, Lim said the priority was more on execution of the contracts in hand and investments already made this year.

“We want to operate well and deliver services within our clients’ expectation so that we have a proven track record to secure more contracts,” he said.

In the terms of financial performance, Lim said Yinson expected to record substantial growth this financial year onwards due to new contracts, assets and new acquisitions.

For the first six months of its current financial year ending Jan 31, Yinson’s net profit rose to RM12.6mil, compared with RM9.2mil a year earlier on revenue RM355.4mil.