GCAP diversifies into energy solution biz by tapping renewable energy assets

G CAPITAL Bhd (GCAP) will diversify its business into the provision of energy solution to reduce reliance on its transportation segment, thus enhancing the company’s future profitability.

The diversification into the energy solution business will provide more variety to the group’s revenue stream given it could leverage its strong assets in the renewable energy segment, according to its executive director Tan Sri Dr Ali Hamsa.

“We have undertaken various measures over the last few years to transform GCAP into a more resilient and sustainable business,” Ali pointed out in a media statement.

“With two strong renewable energy assets on our plate – mini-hydropower plant through our stake in Perak Hydro Renewable Energy Corporation Sdn Bhd (PHREC) and solar projects through our recently completed acquisition in Solarcity Malaysia Sdn Bhd, this will help the group to reduce its reliance on the transportation services sector.”

Tan Sri Ali Hamsa

In December 2020, GCAP through its 90%-owned subsidiary Gunung Hydropower Sdn Bhd, has bagged the Sustainable Energy Development Authority Malaysia’s (SEDA) approval for a 10MW mini-hydropower plant in Sungai Perak, Salu.

The group has until December 2025 to complete the construction of this project which is envisaged to generate a potential revenue of more than RM400 mil over the next 21 years from commissioning of the hydropower plant.

Aside from that, GCAP owns 60% of PHREC, which has been mandated exclusive rights via the Water Rights Agreement (WRA) by the Perak State Government to act as the master developer and overall coordinator for the development of mini-hydropower plants in the state.

The WRA includes the right to build, operate and own mini-hydropower plants at 31 pre-identified sites with an estimated total installed capacity of 297.9 MW.

“To date, GCAP has 11 active sites with a total estimated installed capacity of 90.15MW,” noted Ali.

“All of these sites have secured feed-in tariff (FiT) approval and executed RE-power purchase agreements with Tenaga Nasional Bhd. Of the 11 sites, two sites with a total installed capacity of 20MW have commenced operation and generating sustainable recurring income.”

Earlier this year, GCAP has ventured into Solar PV Systems through its 70%-owned Solarcity which has secured up to five power purchase agreement (PPA) for 9.6MW and 15.5MW under the letter of acceptance (LoA).

Ali further shared that the management is eyeing to complete these projects in stages by prioritising on getting two projects commissioned by 3Q 2021, followed by the commissioning of the remaining PPA and LoA secured in the same year.

“The management is optimistic that these projects will generate revenue of not less than RM1 mil in 2021, followed by yearly revenue of RM8 mil,” added Ali.

In a Bursa Malaysia filing yesterday, GCAP expects its energy solution business to contribute about 25% or more of the group’s total net profit in the near future.

To spearhead and oversee the expansion of the renewable energy segment, the group has formed a project management team, co-lead by Heng Boon Liang and Dzulkifly Abdul Khalid, both of whom have vast experience and credible credentials.

Heng who was actively involved in research and development works throughout his tenure at the US National Aeronautics and Space Administration (NASA) has vast experience via his involvement in many green technologies and business segments, including solar photovoltaic (PV) and hydro turbine.

Meanwhile, Dzulkifly is a mechanical engineer who joined PHREC in 2013 where he was tasked primarily with project management of the mini-hydropower projects and the project coordination with various state government agencies.

At the close of yesterday’s trading, GCAP was up 4.5 sen or 5.52% to 86 sen with 4.5 million shares traded, thus valuing the company at RM265 mil. – May 12, 2021

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