THERE is so much earnings growth catalysts within KPower Bhd (formerly Kumpulan Powernet Bhd) in the realm of renewable energy (RE) if only investors are willing to strip off any association between the company and Serba Dinamik Holdings Bhd from the equation.
For a starter, the company has in place four earnings growth catalysts, namely (i) expansion of RE offering from hydro to solar; (ii) asset ownership business model via shortlisted in LSS4 bid; (iii) RM1.2 bil order book for FY2020; and (iv) RM2 bil order book target for FY2021.
“Investors can rest assure that we have both directors and management with significant experience across diverse areas within the energy, utilities and construction sectors,” deputy chairman and group managing director Mustakim Mat Nun told FocusM.
“This provides us with the fire power to deploy strong execution capabilities to drive growth for KPower moving forward.”
Recall that KPower has seen its share price tumbled in tandem with Serba Dinamik’s share price erosion ever since the flagging of accounting issues related to the latter’s FY2020 financials by its external auditor KPMG.
This has prompted KPower to ‘dis-associate’ itself from the global integrated oil & gas (O&G) service provider by declaring that it is run independently save for the presence of Datuk Dr Mohd Abdul Karim Abdullah as non-independent and non-executive chairman and major shareholder.
Mohd Karim who is group managing director and CEO of Serba Dinamik holds a 26.93% stake in Serba Dinamik and 32.14% in KPower as of June 25.
In fact, the head honcho of the global integrated oil & gas (O&G) service provider has personally stressed that he practices a policy of non-interference by allowing KPower – and Sarawak Consolidated Industries Bhd (SCIB) in which he also holds a controlling stake – “to chart their own destiny”.
“Never have I imposed on both KPower and SCIB to be a rubber stamp of Serba Dinamik or to take any business that will not be beneficial to the company and investors,” Abdul Karim had told FocusM. “The respective management are capable to chart their own direction without my interference”.
Thriving on RE front
Mustakim further expressed optimism of sustained sequential improvement as evident in 54% quarter-on-quarter (qoq) and 432% year-on-year (yoy) growth in group earnings respectively during 3Q FY6/2021 driven by improvements across all the group’s business segments, save for property which saw lower progress billings due to tail-end of project completion.
On a year-to-date basis, the significant growth in KPower’s 9M FY2021 revenue and earnings was driven mainly by (i) higher contributions from construction-related activities on the back of higher project billings from secured order book, and (ii) maiden contributions from the logistics division following the acquisition of Chemtrax Sdn Bhd which was completed in 2020.
Moreover, the company also boasts solid earnings visibility with total outstanding order book of RM2 bil as of May 20 (encompassing projects in Malaysia, Indonesia, Nepal and Laos).
Since June 2019, total bid won by KPower amounted to RM2.37 bil (Malaysia: RM1.56 bil; Nepal: RRM401 mil; Laos (RM241 mil) and Indonesia (RM171 mil).
The company’s major contracts in Malaysia presently include the 44.6MW (megawatt) Pahang Mini Hydropower Plants (contract value of RM475 mil); 32.47MW Perak Mini Hydropower Plants (RM365 mil); 27.3MW Perak Mini Hydropower Plant (RM296 mil) and the Kuala Lumpur Sewerage Treatment Plant (RM270 mil).
For Nepal, the company has clinched two lucrative RE projects, namely the 22.9MW Mini Hydropower Plant (US$48 mil or RM208 mil) and the 22MW Nepal Mini Hydropower Plant (US$46.2 mil or RM193 mil).
As for Laos, KPower’s presence is being represented by the 8MW Nam Samoy Hydropower Plant (US$16 mil or RM66 mil) and the 3X5MW Nam Taep 1 and 3X5 MW Nam Taep 2 Hydropower Plants (US$41 mil or RM175 mil).
“Our present outlook seems bullish considering there is a new target of 35% RE growth in installed power capacity for the ASEAN region by 2025,” projected Mustakim.
At the close of yesterday’s trading (June 24), KPower was down 10.5 sen or 10.77% to 87 sen with 34.7 million shares traded, thus valuing the company at RM394 mil. – June 25, 2021
