Pestech rises to record high on RM1.59b Cambodian concession

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KUALA LUMPUR (Apr 9): Pestech International Bhd saw its share prices rise to a record high of RM5.56 this morning on the group’s RM1.59 billion 25-year Cambodian power transmission concession.

As at 10.50am, the counter retreated to RM5.50, up 14 sen or 2.61% from the previous closing price of RM5.36.

Yesterday, the power system engineering and technical solutions provider announced that its 60%-owned subsidiary Diamond Power Ltd (DPL) has procured all the necessary legal documentation relating to the development of the 230kV Kampong Cham–Kratie transmission system project in Cambodia on a build–operate–transfer basis.

According to Pestech's (fundamental: 0.9; valuation: 0.7) filing with Bursa Malaysia, the duration and validity of the power transmission agreement and novation agreement for the implementation agreement will continue for 25 years from the scheduled commercial operation date.

“The power transmission charges to be paid by Electricite Du Cambodge, Cambodia’s state-owned utility company, to DPL will be US$12.25 million (RM44.51 million) per year for the first three operating years from the scheduled commercial operation date,” the filing read.

The rates will then be US$18.22 million (RM66.2 million) per year from the fourth operating year until the end of the term.

The total collection of charges will amount to US$437.5 million (RM1.59 billion) for the entire 25-year concession period.

The project aims to bring electricity from the upcoming Hydropower Lower Sesan 2 Co Ltd hydropower plant in Stung Treng to Kratie and Kampong Cham.

This signifies the full and effective ownership of the project by DPL, and marks the entry of the Pestech group as an independent power transmitter.

The cost for the development of the project is US$92.21 million (RM335.4 million), which is to be completed by Nov 30, 2017.

(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.)