KUALA LUMPUR: Engineering and energy solutions provider Kinergy Advancement Bhd (KAB) is set to capitalise on the National Energy Transition Roadmap and expects to see a rise in demand for its sustainable energy solutions (SES) segment from the region.
Executive deputy chairman and group managing director Datuk Lai Keng Onn said as Malaysia has set its sights and targets for achieving its carbon goals, more companies, including KAB, are planning their own energy transition roadmaps.
He said KAB is actively pursuing growth opportunities and expanding into targeted regions by developing and establishing itself as a one-stop SES provider.
Currently, the company has a presence in Malaysia, Thailand, and most recently, Indonesia, through the acquisition of a mini hydropower plant with a capacity of 11 megawatts (MW).
"To achieve this goal, we have been acquiring and building assets for our portfolio across the ASEAN region.
"Our immediate focus in terms of geographical locations is in Malaysia, Thailand, and Indonesia, where we already have a footprint.
"We are positioning ourselves as a multi-solutions provider in the sustainable energy space, as opposed to a single renewable energy solution provider, due to our engineering capabilities," he told Business Times.
On the company's outlook for the remainder of the financial year 2023 (FY23), Lai said KAB will continue its portfolio expansion, actively seeking opportunities to expand its asset portfolio within the SES segment on top of what is in the pipeline.
He noted that this includes the expected completion of the acquisition of a biogas plant in Kedah by year-end and the gas plant in Sabah by 2026.
Additionally, he said the company acquired PT Inpola Mitra Elektrindo (PT IME), which will boost the company's earnings for the remaining FY23 and the coming years.
In pursuit of establishing itself as a capable SES solutions provider, he said the company hopes to be able to tender for more lucrative projects as EPCC contractors and, where deemed fit, project owners.
Meanwhile, Lai also mentioned that contributions from KAB's SES segment are on a growth trajectory, and the company expects immediate earnings growth from its newly acquired assets, namely from its recent acquisition of solar assets via Matahari Suria Sdn Bhd, a mini-hydro power plant in Indonesia, and the expected biogas plant in Kedah.
"The company will also record contributions from its EPCC contract worth RM230 million, awarded by Petroliam Nasional Bhd (Petronas) for the construction of a gas power plant in Sabah in the next few years.
"As most of our projects are brownfield projects, we anticipate the accretion of earnings from such projects to be immediate.
"The projects mentioned, along with potential future endeavours, will be key drivers of this growth," he added.
According to Lai, the global trend towards environmental, social, and governance (ESG) and sustainability is also creating numerous opportunities for KAB.
Touching on KAB's financial performance, Lai said the growth in profit for the six-month period ending June 30, 2023 (1HFY23), is mainly the result of some of the company's SES assets bearing fruit.
"To date, our SES segment for the first half of 2023 has shown healthy operating margins of close to 50 per cent.
"This is due to our ability to customise our solutions to the client's needs and requirements, enabling us to tailor each solution better to ensure that both the client and, in the case where we become the asset owner, are financially profitable," he said.
Lai said KAB is anticipating a strong replenishment and a healthy pipeline for revenue growth as of the second quarter of the financial year 2023 (2QFY23).
He said the expected order book for the company by the end of this year is projected to be robust, with the SES segment totalling RM785 million and the mechanical and engineering segment reaching RM193 million.
He added that the expected tender book for the company includes potential projects worth RM2.75 million for SES and RM289 million for mechanical and engineering.
Moreover, Lai said favourable tariffs and regulatory changes promoting renewable energy adoption have boosted profitability within the SES segment.
He highlighted that efforts to enhance operational efficiency, streamline project execution, and optimise resources have also contributed significantly to profit growth.
"Securing high-value contracts and investing in research and development have positioned the SES segment as a preferred provider of innovative, cost-effective solutions.
"Expanding capacity, coupled with adaptability to market dynamics, has allowed the SES segment to meet growing demand and maintain a competitive edge," he added.
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