HANOI (Dec 5): JAKS Resources Bhd expects its profit growth in the next two years to be “very significant” as it recognises construction earnings from the engineering, procurement and construction (EPC) contract for its coal-fired thermal independent power plant project in Vietnam, according to the group’s chief financial officer Steven Ang Si Eeng (pic).
The balance of the EPC contract makes up RM1.3 billion of the group’s total outstanding order book of RM1.88 billion as at Sept 30 this year. The remainder is derived from local infrastructure projects, such as sewerage and the Sungai Besi-Ulu Kelang Expressway.
As at October, the power plant was 41% completed. The overall construction works for the power plant remain on schedule for completion by the second half of 2020, Ang told The Edge Financial Daily in an interview here. The group has recognised a total revenue of RM590.6 million from the plant’s EPC Contract 2 since 2016.
Ang said the group expects to progress with significant works on the plant in the next two years, which will contribute to stronger net profit growth. The construction works now focus on advancing the progress of installing key equipment such as a boiler, turbine and generator for the plant, he added.
Ang also said the group’s latest rights issue with warrants is also aimed at securing additional funds to expedite the construction of the plant. It is the group’s second cash call this year, which JAKS announced on June 6, to raise up to RM69.54 million.
According to JAKS’ filing with Bursa Malaysia, gross proceeds to be raised from the exercise will be used for a partial repayment of bank borrowings and to fund preliminary expenses relating to exploring new renewable energy projects in Southeast Asia.
The issuance and exercise of the warrants will allow the company to raise funds without incurring additional interest expenses, while improving its gearing levels.
Its net gearing improved to 0.25 times as at end-September, compared with 0.45 times as at end-2017, said Ang. JAKS shares slipped two sen or 3.7% at 52 sen yesterday, valuing the company at RM283.89 million.
This article first appeared in The Edge Financial Daily, on Dec 5, 2018.