Yinson invests in EV battery startup Oyika; analysts positive on its green-tech investments

MALAYSIA'S Yinson Holdings on Wednesday announced that it has invested in Oyika, a Singapore startup that provides a battery-swap subscription service bundled with an electric motorbike (e-motorbike), to make electric vehicles (EVs) more accessible in South-east Asia.

The energy infrastructure and technology company said in its Wednesday press statement that this is in line with its net zero carbon ambition, and follows another recent investment in autonomous driverless solution company MooVita.

With its investment in Oyika through its green technologies division, Yinson is seeking to accelerate the adoption of EVs in South-east Asia by supporting the startup in its aim to further develop its technology and strengthen its market position in the region.

The EV battery startup works with local e-motorbike manufacturers to adapt their brand-agnostic technology for local use. Its swappable batteries work with most e-motorbike brands and models in South-east Asia, the press statement said.

Analysts are positive on Yinson following news about its green technology investments, noting that they complement the group's efforts to achieve its carbon goal.

"It is working harder and faster than local peers to achieve its net-zero carbon target, and at the same time is not putting all its eggs in one basket," said UOB Kay Hian analyst Kong Ho Meng in a Thursday report.

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While he believes startups will take time to reach breakeven, he counters that Yinson's initial investments for all green startups, including Oyika, have been small, expected to be not more than US$20 million.

Oyika aims to reach operational breakeven soon, Mr Kong said, adding that it is looking to boost its rider base from 4,000 in 2021 to 1.2 million by 2025.

Maybank analyst Liaw Thong Jung said that Oyika requires only 1,000 units of electric vehicle subscribers and 20 battery-swap stations to breakeven. "Interestingly, it already has an order backlog of 30,000 units," he added, noting that it currently has 200 subscribers.

In his Thursday report, Mr Liaw was optimistic about the investment and Oyika, which he called a "potential unicorn".

"It offers Yinson first-mover advantage, at a low investment," he said, adding that South-east Asia is a large market for its business.

According to Yinson's executive vice-president of new ventures and technology, Eirik Barclay, South-east Asia is the world's largest motorbike market, with motorbikes constituting up to 85 per cent of vehicle population in countries such as Indonesia and Vietnam, the two largest motorbike markets in the region.

"And less than 0.1 per cent of them are electric," Mr Barclay said.

CGS-CIMB analyst Raymond Yap also believes that the investments will be beneficial for Yinson, despite it not contributing to earnings at the current stage.

"Yinson's green technology and renewable energy divisions will be extremely critical for its long-term growth into the energy transition, and for offsetting FPSO carbon emissions," he said in a Wednesday report.

Analysts noted that Yinson is still engaged in the floating production storage and offloading (FPSO) business, where it has won contracts to produce and process hydrocarbons and store oil for the offshore oil and gas industry.

Mr Yap said that the FPSO market is becoming more active and noted that Yinson is the only bidder for Petrobras's FPSO Parque Des Baleias, with the award possibly in September 2021.

Yinson had also bid for Petronas' FPSO Limbayong in Malaysia (Q3 2021 award) and may potentially be awarded Aker Energy's FPSO Pecan in Ghana in 2022, he said, adding that earlier this month, Yinson was awarded the pre-FEED (front end engineering design) work for two TotalEnergies' FPSOs in Angola and Suriname, both of which will likely be awarded in 2022.

Yinson's Malaysia-listed shares closed flat at five ringgit on Thursday.

READ MORE: Oyika raising US$100m to roll out greener rides in Asean

Amendment note: An earlier version of this article incorrectly stated that Yinson had been awarded Petronas' FPSO Limbayong in Malaysia (3Q21F award). It had in fact bid for it. The article above has been revised to reflect this.