Thursday 28 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily on November 29, 2019

KUALA LUMPUR: Kumpulan Powernet Bhd (KPower), which is looking to diversify its business portfolio, is targeting an order book of RM1 billion from the energy and utilities, as well as infrastructure and logistics sectors.

The group just landed a RM254.32 million project from Signvest Sdn Bhd to build sewerage treatment facilities and a 12-floor green building here. The project is part of its plan to venture into a new business area, said KPower in a stock exchange filing yesterday, adding that it will be seeking shareholders approval for the diversification.

KPower has mainly been involved in textile manufacturing, property development and real estate investment. As of the first quarter ended Sept 30, 2019 (1QFY20), the group’s main revenue driver was property development.

Group managing director and deputy chairman Mustakim Mat Nun said he intends to maintain these segments, but wants to increase contributions from other areas to help sustain growth.

“The demand for textile business is still there. However, we want this new growth area, especially in green energy, to grow and become a regional player. We are expecting it to contribute significantly this year,” Mustakim told reporters after the group’s extraordinary general meeting yesterday. The new project win pushed KPower’s current order book to RM265 million, said Mustakim. The group is bidding for RM2.5 billion more jobs.

The group’s new largest shareholder with a 53.38% stake, Datuk Dr Mohd Abdul Karim Abdullah, said the goal is for KPower’s order book to reach RM1 billion this year. Abdul Karim, who was redesignated from deputy chairman at KPower to the chairman’s post yesterday following the retirement of Datuk Roshidi Hashim, is also the founder and managing director cum chief executive officer of oil and gas engineering group Serba Dinamik Holdings Bhd.

Given KPower’s recent return to the black, Mohd Abdul Karim said the focus is now on ensuring sustainable growth and continued profitability. “That means the projects we secure must have a fast rate of return. That’s the strategy moving forward,” he said.

 

Asset sale on the cards

To improve the group’s cash position, Mohd Abdul Karim said KPower intends to sell off assets like its Liverpool-based student accommodation, which he said is not the group’s priority now.

KPower made a a net profit of RM476,000 for FY19 as revenue more than doubled to RM13.24 million, after having been loss-making for the past eight years. In 1QFY20, the group managed to keep its earnings momentum with a net profit of RM948,000, compared to a net loss of RM328,000 a year ago, as revenue jumped more than seven times to RM11.16 million from RM1.46 million.

The company has also announced a new policy to pay out 20% of its annual consolidated profit after tax as dividends from FY20.

At the EGM earlier, the group received shareholders’ approval to enter into recurrent related party transactions with related parties that it deemed necessary for its day-to-day operations and to support its order book growth. The related parties are: OHP Group, a green power technology company that is 51% owned by Mustakim, and Serba Dinamik, which is 23.61%-owned by Mohd Abdul Karim.

      Print
      Text Size
      Share