KUCHING: Sarawak Cable Bhd (SCB) is expected to commission its mini hydropower plant in North Sumatra, Indonesia in the third quarter of next year, according to its group managing director and chief executive Toh Chee Ching.
Construction for the project, which is the company’s first major investment outside Malaysia, commenced last August. The proposed 10MW plant costs an estimated RM80mil to build.
SCB has a 78% equity interest in PT Inpola Mitra Elektrindo (IME), which will sell the electricity generated from the hydro power plant to PT Perusahaan Listrik Negara Persero (PLN) for 20 years. The concession is renewable.
Toh said the commissioning of the plant would help to generate consistent revenue and profit for the SCB group.
On the progress of two packages of works under Sarawak Energy Bhd’s 500kV backbone transmission line project undertaken by SCB, he said the project took off the ground last November and was anticipated to generate good earnings for the group’s 2014 and 2015 financial years.
SCB’s wholly-owned unit Trenergy Infrastructure Sdn Bhd and joint venture partner Sinohydro Corporation (M) Sdn Bhd are implementing the two packages worth RM619mil. The packages are from Mapai to Lachau, and Lachau to Tondong.
“Moving forward, the company’s recent investment into power lines’ inspection and monitoring, maintenance and services using helicopter will be another new technology used by the group to enhance its power transmission lines,” said Toh in the company’s 2013 annual report released recently.
SCB group has three key business segments — manufacturing and supply of power cables and conductors, fabricated and galvanised steel products, transmission line construction, and renewal energy.
Toh was upbeat about the group’s prospects as it would likely to benefit from the development of heavy industries under Sarawak Corridor of Renewable Energy (SCORE) and infrastructure development in rural Sarawak under the Government Transformation Programme (GTP).
“There is an urgent need to enhance the electricity generation and power distribution capacity of Sarawak to facilitate infrastructure and industrial development in the years ahead.
“This would translate into a strong and continuous demand for power cables and conductors, steel products and transmission lines. This fits well into our business with good track record on its capability and reliability to undertake various projects as turnkey contractor in power transmission and distribution line business,” he said.
In the last financial year, SCB’s net profit fell to RM1mil from RM5.9mil in 2012 as revenue dropped to RM208.7mil from RM286.6mil, or down by 22%.
Meanwhile SCB has accepted a conditional offer from HNG Capital Sdn Bhd to acquire 100% equity interest in two companies, namely Universal Cable (M) Bhd (UCMB) and Leader Cable Industry Bhd (LCIB), for RM210mil.
“The purchase consideration will be settled via a combination of cash, assumption of liabilities and issuance of new ordinary shares in SCB,” the company said in a filing with Bursa Malaysia yesterday.
The proposed acquisitions are a related party transaction. SCB’s non-independent non-executive director Datuk Seri H’ng Bok San @ H’ng Ah Ba is HNG’s controlling shareholder and director. Kon Ted Liuk, the alternate director to H’ng in SCB, is a director of LCIB,
Pursuant to the conditional offer, SCB is given an exclusive period of 60 days to carry out a due diligence on both UCMB and LCIB.
“If SCB decides to proceed with the proposed acquisitions upon satisfactory completion of the due diligence, the company will pay HNG a deposit of RM2.1mil, and both parties will then enter into a share sale agreement (SSA) to formalise the proposed acquisitions within 30 days.
“The SSA shall stipulate that HNG shall guarantee that the total profit before taxation of UCMB and LCIB for financial year ending Dec 31, 2014, shall be not less than RM21mil,” said SCB.