KUALA LUMPUR: Pestech International Bhd, an integrated electric power technology company, is tendering for power projects in the Philippines and Indonesia as it positions itself to capitalise on the opportunities of the Asean Economic Community (AEC), which will be launched in December this year.

Pestech chief executive officer Paul Lim Pay Chuan said the home-grown company has undertaken projects in countries such as Cambodia, Brunei, Sri Lanka and Ghana, and will focus on penetrating Myanmar, Indonesia and the Philippines in the next financial year ending June 30, 2016 (FY16).

“We have already started tendering for projects in the Philippines and Indonesia,” he told The Edge Financial Daily in an interview.

Pestech’s (fundamental: 0.9; valuation: 0.3) core business is the provision of comprehensive power system engineering and technical solutions for the construction of electricity transmission and distribution assets.

About 40% of the group’s revenue is currently derived from its projects in Cambodia. One of Pestech’s more notable projects in the country is the US$86 million (RM305 million) 230kilovolt (kV) West Phnom Penh to Sihanoukville transmission line and substation extension project, which it secured in March last year.

“We have been in Cambodia for four years and have carved a reputation for ourselves as we have built substations and transmission lines there. There are a lot of requirements for [energy] utility network infrastructure in Cambodia, and its government wishes to make electricity available for 60% to 70% of its population by 2020,” said Pay Chuan.

“Currently, electricity is available to about 20% of the country’s population,” he said.

Pay Chuan said Pestech’s focus in Cambodia will open up opportunities for the group to tap into the rest of Indochina.

“Cambodia will be a springboard for us into Laos, which is still at a very early stage of power development, and naturally we will then go into Myanmar as the demand for energy and utility network infrastructure there is huge,” he noted.

On the local front, Pestech has been active in Sarawak, with contracts from Sarawak Energy Bhd and a few private companies contributing 30% to its revenue stream.

“We have benefited from the Sarawak Corridor of Renewable Energy which has industrialised Sarawak and increased the demand for power usage,” said Pay Chuan.

For FY15, the group targets to obtain new orders of close to RM550 million. As at September 2014, its total order book stood at RM546 million, of which new orders constituted some RM400 million.

“These orders, from both local and foreign customers, would be able to sustain the [profit growth] of the group in FY15 and FY16. As for projects that we are tendering for, our tender book size to date is around RM1.4 billion,” said Pay Chuan.

The group changed its financial year end from December to June, hence for its FY15 ending June, Pestech will be reporting 18 months of financial results.

It had reported a net profit of RM20.72 million for its  financial year ended December 2013 (FY13), which was 25.4% higher than FY12’s net profit of RM16.52 million. Revenue also rose 33.5% to RM181.77 million in FY13 from RM136.09 million in FY12.

For the nine months ended September 2014, Pestech reported a net profit of RM16.9 million on revenue of RM171.82 million.

On whether this profit and revenue growth trajectory will be maintained in its upcoming financial years, Pay Chuan said the group is banking on its strong order book, as well as its regional presence to maintain the same growth.

“We hope, as [the projects roll in] and we expand our foothold in the region, we will be able to reach a revenue of RM1 billion in the next five years,” he said.

Pestech has been listed on Bursa Malaysia since May 2012. Last Friday, Pestech shares were trading at RM4.25, 4.25 times higher than its initial public offering price of RM1 per share, with a market capitalisation of RM RM722.82 million.

“Our share price is a reflection of our group’s ability to provide services which are in demand not only in Malaysia, but regionally. I believe that is [our intrinsic value], and the potential that investors seek in our group,” said Pay Chuan.

Pestech’s largest shareholder is its executive chairman Lim Ah Hock who holds a 37.35% stake, while Pay Chuan, who is Ah Hock’s nephew, has a 22.88% equity interest.

Pay Chuan also said the group has plans in the pipeline to diversify its revenue stream to include railway electrification, and to enhance its information management systems.

“We will position ourselves to provide not only the hardware to our clients, but high technical content services, and down the line we look to diversify our revenue stream to include not only our [core] transmission and distribution business, but rail electrification and to enhance information management systems for our clients as well,” said Pay Chuan.

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This article first appeared in The Edge Financial Daily, on February 16, 2015.