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KPower bags RM296m hydropower project in Perak

KPower bags RM296m hydropower project in Perak

09 Dec 2020

Kumpulan Powernet Bhd (KPower) has bagged a contract worth RM296 million for a mini-hydropower plant in Perak.

In a bourse filing, the group announced that its wholly-owned subsidiary KPower Engineering Sdn Bhd had received and accepted a letter of award yesterday from Kangsar Hidro Sdn Bhd to undertake the engineering, design, procurement, construction, commissioning and completion of a mini-hydropower plant with a total capacity of 27.3MW in Sungai Singor, Perak.

Kangsar Hidro is a 15:85 joint venture entity between Perak state agency Yayasan Perak and Kangsar Capital Sdn Bhd. 

KPower is expected to complete the project within 48 months from the commencement date or by Dec 24, 2024, whichever is earlier.

The scope of work includes a preliminary study, engineering, construction, supervision, testing, commission, reliability test, remedy of defects during the defect liability period and provision of all equipment, both permanent works and temporary works for the project.

The contract win is expected to contribute positively to KPower’s net assets, consolidated earnings and earnings per share for the financial year ending June 30, 2021 (FY21) to June 30, 2025 (FY25).

It is worth noting that KPower deputy chairman, managing director and substantial shareholder Mustakim Mat Nun — who controls a 0.50% direct stake and 14.94% indirect interest in KPower via Grand Deal Vision Sdn Bhd — is the director and major shareholder of OHP Ventures Sdn Bhd, an indirect shareholder of Kangsar Hidro with an effective interest of 85%. OHP Ventures is the parent of Kangsar Capital. 

As such, he is deemed to be interested in the award, noted the Bursa announcement.

Additionally, KPower’s chief financial officer Amirul Afif Abd Aziz is also a director and major shareholder of OHP Ventures, an indirect shareholder of Kangsar Hidro with an effective interest of 85%, and is also deemed to be an interested party in KPower’s contract win.

The latest contract win constitutes a recurrent related party transaction (RRPT) given Mustakim and Amirul’s stakes in OHP Ventures, stated the Bursa announcement. KPower had obtained shareholder approval to enter into the RRPT with OHP Capital and its subsidiaries (which include OHP Ventures, Kangsar Capital and Kangsar Hidro) for an aggregate value of RM250 million, at its annual general meeting (AGM) today.

“As the revenue to be generated from the project is estimated to be spread out within 48 months from the commencement date of the project, the company expects that the revenue to be generated from the project during the period until the next AGM will be within the Existing RRPT Mandate,” KPower noted.

In a separate statement, KPower chairman Datuk Abdul Karim Abdullah said the contract win marks the group’s concentrated efforts towards securing continuous projects for the group as it steps closer to its target of additional RM2 billion for its FY21 order book.

To date, the group’s order book in Malaysia, ASEAN countries and Nepal stands at RM1.4 billion.

Mustakim said “Malaysia will always be an anchor” for the group.

“This project will further solidify our position and strengthen our platform as we explore other opportunities. While hydro remains our strong point, we are actively venturing into other products and markets.

“We are optimistic of the prospects of the group in view of the resilient outlook for the energy sector and the expected economic recovery. This presents us with innumerable opportunities to capture and simultaneously expand our growth in the energy sector,” he said.

KPower rose 1.9% this afternoon to RM5.35, yielding a market capitalisation of over RM600 million.

Source: The Edge Markets

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