PETALING JAYA: Yinson Holdings Bhd’s investment in clean energy company Sterling PBES Energy Solutions Ltd (SPBES) is long-term positive and in line with its net-zero carbon ambitions.
Total invested amount was guided at below US$22mil (RM92mil), according to RHB Research in a report following a recent conference call hosted by Yinson.
However, near-term earnings contributions from its 20% equity stake in the Vancouver-based energy storage company offering marine and industrial solutions is expected to be minimal, said the research firm.
It noted that SPBES’ current order book stands at US$41mil (RM171mil) and earnings before interest, taxes, depreciation, and amortisation (Ebitda) is ambitiously projected to reach US$70mil (RM293mil) by 2023 and US$168mil (RM702mil) by 2025, based on current pipelines and continuous growth in the marine battery industry.
“Services revenue should increase in the long run, with wider clientele and ageing energy storage solutions (ESS).
“SPBES is also looking to lease infrastructure and sell power, whereby interchangeable containers can be swapped at the port. Customers will only pay a fixed monthly fee and variable charge for consumed electricity, eliminating time-consuming charging,” said the research firm.
Maybank Investment Bank (IB) Research, meanwhile, noted that SPBES is debt-free and is a synergistic fit to Yinson’s existing marine operations.
“The global marine ESS market is a growing market worth about US$150bil (RM627bil). Competition-wise, SPBES is ranked third in this category, by projects deployed,” said Maybank IB.
The research firm believes that SPBES has enormous growth potential, if rightly executed.
“It has a capital light business model, with revenue break-even point at US$20mil (RM84mil) and is Ebitda positive,” added Maybank IB, which maintains a “buy” call on Yinson with a RM10.90 target price.
Earlier, Maybank IB also highlighted that Yinson has the capacity to take on new jobs, consisting of mid-size floating, production, storage, offloading (FPSO) and one large-scale project as the company is well entrenched to capitalise on the resurgence of the FPSO tenders pipeline over the next 12 months.
Maybank IB noted that the FPSO business is booming again, with the demand for FPSO stronger than the pre-Covid19 crisis level.It added that the dynamic situation offers operators strong leverage during negotiation talks, with the enviable position of being able to pick and choose projects.
RHB Research also reiterated its “buy” call on the stock and has a new target price of RM7.40 from RM5.81.