PETALING JAYA: Kejuruteraan Asastera Bhd (KAB) is eyeing sturdy growth in its sustainable energy solutions (SES) segment, which is supported by potential concession revenue of over RM500mil until 2046.
The engineering and energy solution provider expects the revenue generation to come from its growing asset portfolio in clean energy generation, renewable energy generation and the provision of energy-efficient solutions, apart from its existing contracts in Malaysia and Thailand, as well as ongoing acquisitions.
At a virtual media briefing after KAB’s EGM yesterday, managing director Datuk Lai Keng Onn said the SES concessions in hand augurs well for the group to establish a stable revenue stream in the future, complementing its core business of providing mechanical and electrical (M&E) engineering solutions.
At the EGM, KAB’s shareholders approved the company’s diversification into the SES segment and the group is poised to accelerate expansion to capture more opportunities in the fast-growing industry.
Additionally, its shareholders approved the proposed private placement of up to 361.6 million new shares, representing about 20% of the group’s existing issued shares, mainly for KAB’s expansion plans for its SES segment and working capital needs.
Based on an illustrative issue price of 37.05 sen per share, the potential proceeds raised would be around RM134mil, said KAB.
The group has earmarked to utilise RM36mil as working capital, RM31mil for the repayment of bank borrowings, RM66.2mil for funding its existing and future SES projects and RM0.8mil for estimated listing expenses.
“The group’s enlarged share capital after the proposed private placement at the illustrative price of 37.05 sen would increase to RM237.6mil from RM103.6mil currently,” KAB added.
On its prospects, Lai said: “We estimate to achieve about RM200mil in revenue for financial year 2023 (FY23), and expect the SES segment to see steady growth of between 20% and 40% in three to four years.
“As for this year, revenue contribution from the SES segment is more than 25%,” he said.
Lai noted that the SES segment, which is slated to expand, also has better profit margins than its M&E engineering segment.
The group’s M&E engineering segment has been facing challenges.
These include fluctuations in raw material prices owing to supply chain disruptions since last year, resulting in a squeeze on its margins.
Currently, the group’s M&E engineering segment has a high single-digit profit margin, while its SES segment has a profit margin of about 15% to 25%.
As at Nov 14, KAB had 14 solar contracts in Malaysia and Thailand with a combined capacity of 17,318 kWp.
The group also provides customised energy-efficient solutions, including chiller optimisation, to 15 projects that aim to promote energy efficiency in residential, commercial and industrial buildings.