KUALA LUMPUR: Jaks Resources Bhd’s wholly-owned unit Golden Keen Holdings Ltd has been awarded an engineering, procurement and construction (EPC) contract worth US$454.5 million (RM1.75 billion) for works to be conducted at the group’s build-operate-transfer power plant in Vietnam.
In a statement yesterday, Jaks Resources said the contract would boost its outstanding construction order book to RM2.44 billion. According to the statement, the EPC contract to Golden Keen encompasses both civil engineering works, such as construction of the independent power producer (IPP)’s infrastructure and buildings, as well as mechanical and electrical (M&E) engineering works.
Jaks Resources chairman Tan Sri Hussin Ismail said the group will have a significant role to play in the civil and M&E engineering works via the award of the EPC contract to its wholly-owned subsidiary. “We have been developing and strengthening our in-house infrastructure construction capabilities through the years, and this contract will further enhance our positioning as a significant construction player,” he said.
“We look forward to working closely together with our partner CPECC (China Petroleum Engineering & Construction Corp) to successfully deliver on this project.”
The EPC contract was awarded to Golden Keen by Jaks Hai Duong Power Co Ltd (JHDP), a wholly-owned subsidiary of Jaks Power Pacific Ltd, which in turn is a 50%-owned subsidiary of Jaks Resources. JHDP had also awarded CPECC an EPC contract worth US$1.06 billion on the design, execution and completion of major works as stipulated in the contract.
The consortium is also expected to complete the performance tests to meet conditions for the first power plant unit no later than three and a half years from the site handover date.
To recap, JHDP was formed as a joint venture (JV) between Jaks Resources’ unit Jaks Power Holding Ltd Co and a consortium of Southwest Electric Power Design Institute Co Ltd and China Power Engineering Consulting Group International Engineering Co Ltd (CPECC Consortium) for the construction of a US$1.87 billion coal-fired power plant in Vietnam.
JHDP is the JV company which will spearhead the project, which sees the construction of two 600mw power generating units slated to begin in the first half of 2016 and commence operations in 2020.
Hussin said that all stakeholders will take comfort in the award of the EPC contract to the CPECC-led consortium. “Its strong expertise and solid track record in delivering sizeable power plant projects significantly mitigates the construction and completion risks,” he said.
Jaks Resources (fundamental: 0.65; valuation: 1.5) shares closed one sen lower at 97 sen, with a market capitalisation of RM427.4 million.
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.
This article first appeared in digitaledge Daily, on August 4, 2015.