KUALA LUMPUR (Feb 11): Hexza Corp Bhd has entered into a sale, purchase and lease agreement to purchase part of a 8MW heavy fuel oil power generation system in Kauthaung, Myanmar, from Tembusu Industries Pte Ltd for US$6 million (RM21.66 million).
Under the agreement, Singapore-based Tembusu will then lease back the equipment from Hexza for 10 years.
In a filing with Bursa Malaysia today, Hexza (fundamental: 1.45; valuation: 3) said it had on Jan 30 entered into the agreement with Tembusu to purchase the oil power generation system to lease it back to Tembusu at a monthly rental of US$130,205, payable in arrears on a quarterly basis.
Hexza, a formaldehyde-based adhesives and resins manufacturer, said it is required to pay US$3 million within seven days from the date of agreement.
The equipment is expected to be completed and commissioned by Jul 1, 2015, said Hexza.
The oil power generation system consists of four-1.5 MW dual fuel engine driven new generating sets, four fuel cleaning system accessories and pumps for engines, four radiators and three-3.5 MVA, 0.4/11kV low load loss new transformers and a 11Kv AIS control panel, related software and monitoring system.
Hexza said the purchase consideration is to be funded through internally generated funds.
Tembusu is involved in designing, engineering, project management, operation or maintenance of power and utility plants, with expertise in conventional and renewable energy technologies.
Hexza said, "The investment in the equipment provides the company with a good return of its funds as compared to placement of funds with financial institutions. The payback period is about 4½ years based on the monthly lease rental payable by Tembusu."
In another filing, Hexza said it has raked in a net profit of RM4.27 million in its second financial quarter ended Dec 31, 2014 (2QFY15) up 63.51% from RM2.73 million in 2QFY14, mainly due to improved results in its resins division due to lower raw material costs.
Revenue came in 4.44% higher at RM37.89 million from RM36.29 million.
As for its six months ended Dec 31, 2014 (1HFY15), its net profit soared 161.97% to RM8.42 million from RM3.63 million a year earlier. Revenue climbed 13.93% to RM77.16 million from RM67.73 million, due to higher turnover of its ethanol and resins division.
Hexza said the current Malaysian economic outlook is hampered by the drastic drop in crude oil prices and the weakening of the ringgit against the US dollar.
"These factors may post challenges to the group's operational profitability in the second half of the financial year. Nevertheless, the directors are confident that the operational performance for the second half of the financial year will be satisfactory although not as good as the first half of the financial year."
Hexza has closed 3.36% higher at 77 sen today, giving it a market capitalisation of RM154.29 million.
(Notes: 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.)