Kinergy banks on green energy

KUALA LUMPUR: Kinergy Advancement Bhd (KAB) – formerly known as Kejuruteraan Asastera Bhd – is optimistic its sustainable energy solutions (SES) segment will remain the group’s main revenue contributor in the quarters ahead.

KAB group managing director Datuk Lai Keng Onn said the group targets the SES segment to make a profit contribution of 70% to 80% in financial year 2023 (FY23).

“The SES segment contributed 32% to the overall profit after tax (PAT) of the group’s profitable segments in 2022. However, the figure rose to 71% year-on-year in the first quarter of 2023 (1Q23).

“As such, I think we are on track to achieve our target for the segment,” he told reporters on the sidelines of its rebranding event yesterday.

Lai added the group had RM700mil in project value (ongoing and completed) for the SES segment, which is poised to provide KAB with a stable recurring income for the next 10 to 20 years.

“This order book consists of the concession business and also engineering, procurement, construction and commissioning (EPCC) contract from Petroliam Nasional Bhd (PETRONAS). For the EPCC contract, we will commence this year and it is targeted to be completed in 2026.

“The rest of the concession business will be carried out according to the length of the concession; some 10, 15, or 20 years.

“Hence, we are quite confident regarding the company’s bottom line due to contributions from this segment over the next 10 to 20 years,” he said.

The energy and electrical and mechanical engineering solutions provider unveiled its new name, Kinergy Advancement Bhd, and logo yesterday.

The group stated its new name and logo signify the company’s commitment to expand its SES business regionally.

In a statement KAB said “Kinergy” is a fusion of the words, “kinetic” and “energy”. It symbolises the motion, force and momentum that is generated when the group takes action to drive positive change and progress toward its goals.

The word “Advancement”, represents the group’s commitment for continuous improvement and progress.

“This name change marks the timely rejuvenation of our business operations with our SES segment, signalling the way forward in driving sustainable growth for the group.

“We have made significant strides in our SES segment over the years and together with its strong financial performance thus far, we are confident the SES segment will underpin the group’s continued growth moving forward,” Lai said.

He said the margins in the SES segment were high and one of the reasons behind the group’s decision to venture into it.

“Our most prized asset is contributing 45% to 50% profit after tax margin, so it is very good in comparison to EPCC and the mechanical and electrical engineering (M&E) segment. The margins for the construction industry are not very encouraging at the moment,” Lai said.

Given that there is a certain synergy between the M&E and SES segments, KAB will not phase out the M&E segment completely.

“I think the growth for the M&E segment will be slow and steady. We are actually tendering new jobs at the moment. We will also focus more on industrial projects for our engineering business,” Lai said.

He added the company will be acquiring several new assets this year, namely, a biogas plant as well as a mini hydroelectric power plant in Indonesia.

The group is also set to develop and operate a gas-fired power plant through its joint venture with Petronas Gas Bhd, which was valued at RM230mil, making it the group’s largest SES endeavour to date.

“In the last few years, we have been actively expanding our asset portfolio in order to be a one-stop energy and engineering solutions provider. We are still looking for opportunities,” he said.

KAB presently owns a suite of sustainable energy assets under its SES segment including co-generation and waste heat recovery plants and solar photovoltaic systems.

Lai stated the new acquisitions, brownfield and greenfield developments, will be financed with internal funds and bank borrowings.

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