By Emmanuel Samarathisa
KEJURUTERAAN Asastera Bhd (KAB) is confident it has the financial firepower to fuel expansion after completing its listing on the Main Market of Bursa Malaysia by the third quarter of this year, despite the Covid-19 crisis which has seen the country undergoing a movement control order (MCO).
KAB founder and managing director Datuk Lai Keng Onn told FocusM that the group had enough measures at its disposal to achieve double-digit earnings growth this year. “KAB possesses RM35mil cash and equivalents at this point of time and the management does not rule out the possibility to tap into financing from the banks,” he said.
On April 14, the electrical and mechanical engineering company said it proposed to move its entire issued share capital to the Main Market from the Ace Market by the third quarter of this year.
In a filing with Bursa that day, the electrical and mechanical engineering firm said the transfer would “enhance its prestige, credibility and reputation and accord the group greater recognition from various stakeholders.”
KAB’s core businesses are energy saving (chiller optimisation and energy management systems) and power generation (cogeneration and waste heat recovery) businesses, namely outright purchase and energy performance contracts.
Among the concerns by analysts tracking the stock is the capital expenditure (capex) required by KAB to fuel expansion. But Lai said that outright purchases did not require as much capex as energy performance contracts.
“The clients can decide based on the amount of savings they prefer. For outright purchase, the client will pay KAB progressively based on the implementation and enjoy 100% of the savings. For this option, there will also be a guarantee on the savings for a certain period.
“And for energy performance contracts, KAB will finance the project and share the savings with the client. Both parties will enter into a contract/concession for X number of years,” he said.
Meanwhile, Lai said the current Covid-19 crisis which had seen Malaysia dive into a recession and the capital market being hit had not deterred the group from listing on the Main Market.
“Entrepreneurship will prevail regardless of how harsh the business environment becomes. KAB has fulfilled the mainboard transfer criteria and the management believes that its order book (sufficient for 2.2 years) will ensure the company to continue to deliver strong results,” he said.
KAB had met the requirement set out in the equity guidelines by the Securities Commission and the Main Market Listing Requirements by Bursa Malaysia. These included the profit requirements of aggregate profit-after-tax of RM20 mil for the past three financial years and a minimum profit-after-tax of RM6 mil for the most recent financial year.
KAB’s PAT for the financial years ended 2017, 2018 and 2019 were RM6.78mil, RM8.56mil and RM10.44mil respectively. The group added in its bourse filing that it had sufficient working capital for at least 12 months.
Lai also said KAB had no plans to diversify further post-MCO. “The management foresees the demand for energy-saving products to pick up as cost savings for survival will be the first priority of all the businesses in this country,” he said. – April 27, 2020