KUALA LUMPUR (Apr 1): Construction and management services provider DKLS Industries Bhd has failed to dispose of its stake in Chinese power firm Yong Yu Hydro Electric Development Company Co Ltd.

In a filing with Bursa Malaysia this evening, DKLS (fundamental: 1.0; valuation: 1.8) said the Memorandum of Understanding (MoU) that was entered into by its 51%-owned subsidiary DKLS Energy Sdn Bhd with Sichuan Nengtou Electric Power Development Co Ltd to effect the disposal 
Of DKLS Energy's entire 30% stake in Yong Yu has lapsed on March 31, this year.

The group said this is because the seller and buyer failed to sign a definitive Share Transfer Agreement before the expiry date on Mar 31, but did not elaborate why.

The MoU was first entered into on Oct 20, 2014. The parties had agreed then that the share transfer price for the disposal shall be based on Yong Yu's seven power stations, at an indicative price of RMB1.6 billion (RM859.73 million), subject to an independent valuation.

DKLS's announcement today did not say anything about the due diligence that Sichuan Nengtou Electric Power Development Co Ltd undertook on Yong Yu subsequent to the MoU.

DKLS had previously announced on Jan 30, 2015 that Sichuan had been granted an  extension of time to March 31 to complete the due diligence on Yong Yu.

Yong Yu, which was incorporated in 2003, has the right to develop, construct and operate nine power plants with a total capacity of 167,400 KW within the Xi Luo River area situated in Pu Ge County, Liang Shan State, China. As at Oct 2014, five power plants have been constructed and are in operation.

According to DKLS's filing with the local exchange October last year, the original cost of investment in Yong Yu was RM44.52 million.

Based on DKLS audited financial statements as of Dec 31, 2013, the carrying value of DKLS's interest in Yong Yu amounted to RM55.79 million.

DKLS closed unchanged at RM1.79 today, which gives it a market capitalisation of RM165.93.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)