KUALA LUMPUR: Yinson Holdings Bhd's latest strategic green investment in Sterling PBES Energy Solutions Ltd (SPBES) is deemed a synergistic fit to its existing marine operations to accelerate its transition to a net-zero carbon entity.

Maybank Investment Bank Bhd (Maybank IB) said electrifying marine vessels precisely aligns with Yinson's sustainability and climate goals.

"SPBES is debt-free, earnings before depreciation and amortisation (EBITDA)- generating and its product/technology is market-proven," said analyst TJ Liaw in a research note recently.

The clean energy investment in a Canada-based energy storage solutions (ESS) provider was made by Yinson's Singapore-based subsidiary, Yinson Venture Capital Pte Ltd, a wholly-owned subsidiary of Yinson Green Technologies Pte Ltd (YGT).

Maybank IB said the investment focuses on the marine sector with operations in 10 countries and installation partners in 26 countries.

"SPBES brings ready to market zero-emission turnkey solutions (electrifying vessels via fixed battery and battery swaps solutions) for the shipping/marine transportation that can reduce emissions by 20 per cent to 100 per cent(hybrid/ electric vessels)."

Liaw said the global marine ESS market was a growing market and worth about US$150 billion, citing that Competition-wise, SPBES was ranked in this category.

"SPBES has 829MWh in pipeline capacity for 365 projects spanning over 400 vessels with a combined contract value of US$576 million."

Maybank IB said SPBES has a capital-light business model, with a revenue break-even point at US$20 million with EBITDA positive (US$2 million in FY21), and is projected to grow to US$33 million, US$125 million, US$245 million, US$354 million in FY22, FY23, FY24 and FY25, respectively.

"We estimate that Yinson is acquiring its 20 per cent stake at SPBES at three times of FY22 EV/EBITDA. Its order backlog is at US$31 million."

He said Yinson the rebound in crude oil price would be the most dominant near-term share price driver on the upside risks.

This will translate into new job wins (prospecting for two to three firm tenders) that will significantly jump in earnings.

"Merger and acquisition are not entirely ruled out as values are undemanding following the recent steep drop in asset prices."

On the downside risks, further weakness in oil price will affect share price performance and poor execution capabilities and contract(s) termination related to its floating production storage and offloading (FPSO) operations and inferior cost management.

"This will have a detrimental effect on earnings and market perception."

Maybank IB maintained a Buy call for Yinson with a target price of RM10.90.