Powerwell sees growth from replacement market, new projects abroad

  • Corporate News
  • Monday, 27 Jul 2020

Powerwell Holdings Bhd employee at work.

PETALING JAYA: The construction sector may be facing a lull but that does not seem to be putting a damper on the prospects of Powerwell Holdings Bhd, an electricity distribution product manufacturer.

Powerwell, listed on the ACE Market in January this year, is expecting revenue growth to come from the “replacement market” in Malaysia and from new infrastructure projects abroad, said executive director Ricky Lee. (pic below)

“In Malaysia, the replacement market we are referring to is when a plant needs to update its production line to cater to technology changes or when old buildings replace ventilation systems.

“For example, a semiconductor plant would need to revise its products, the changing of its production line will include low voltage (LV) switchboards and medium voltage (MV) switchgears.

“The replacement market will be recurring in nature. There is a growing demand for the replacement market in the northern region – Penang and Kedah, ” he explains.

As for the group’s overseas market, Powerwell is expecting a revenue growth of 15% from Vietnam and 20% from Indonesian this year.

In Indonesia, Powerwell is supplying its LV switchboards and MV switchgears to the Makassar and Surabaya airports, as well as a data centre. These projects made up part of Powerwell’s RM78mil order book as of June 30 this year, which will be billed progressively until 2021. To date, Powerwell has a tender book of RM350mil to RM400mil.

Lee said there is potential for Powerwell to tender for more projects in Indonesia as the government there worked on shifting its capital from Jakarta to Kalimantan. Powerwell plans to establish a manufacturing facility in Indonesia over the next two years.

In Vietnam, Powerwell has its own manufacturing facility in Ho Chi Minh City that is seeing growing acceptance and demand from end-users for electricity distribution products with certificates of origin from Malaysia.

The group is currently in talks with global brands to be an authorised manufacturer and seller in Vietnam.

Powerwell produces its own brand LV switchboards and MV switchgears alongside third-party brands like Siemens and Schneider that the group is authorised to manufacture and sell in Malaysia.

These brand associations enable Powerwell to expand its customer base, market presence and range of product offerings.

“We are also looking to roll out new products under the Powerwell brand name, such as the 33 kilovolts switchgear that has been locally adapted.

“With our own brand products, we are able to expand our offerings to offer after sales service, ” said Lee.

Powerwell registered a net profit of RM9.12mil on the back of a revenue of RM88.1mil for the financial year ended Dec 31,2019 (FY19). On a year-on-year basis, the group saw its net profit and revenue decline by 25% and 16.3%, respectively.

Lee said the decline in earnings was mainly due to its Indonesia and Bangladesh markets, which saw infrastructure and development projects being held back due to general elections.

In FY18, Bangladesh contributed 25.4% to Powerwell’s group revenue of RM105.4mil, while Indonesia made up 4.7% of total revenue. However in FY19, the Bangladesh market did not contribute any revenue to the group. On the other hand, revenue derived from the Indonesian market amounted to 6.9% of total group revenue of RM88.1mil in FY19.

Going forward, revenue contributions from Indonesia and Bangladesh are expected to be stable and Powerwell’s financial results for FY20 are expected to improve, said Lee.

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