Sunday, October 29, 2023

Gadang sees bright future

 By Business Times/ Sharen Kaur - October 11, 2023


KUALA LUMPUR: Gadang Holdings Bhd is expected to chart stronger years ahead thanks to the expansion of its renewable energy division.

The commercial operation date (COD) for the company's 5.9 megawatt (MW) solar photovoltaic energy generating facility in Tawau, Sabah is scheduled for June 30 next year, according to subsidiary Regional Utilities Sdn Bhd managing director Foo Mieng Yong.

The facility is 45 per cent complete as of August 31 this year.

He said once completed, the facility will be linked to Sabah Electricity Sdn Bhd's (SESB) medium voltage distribution network in PPU Sri Indah, providing Gadang with long-term earnings visibility.

In a strategic move to diversify the division's renewable energy generation portfolio, Gadang's 70 per cent-owned Nusantara Suriamas Sdn Bhd secured a power purchase agreement (PPA) with SESB for a large-scale solar power plant photovoltaic (LSSPV) in December 2021.

The PPA governs the obligations of Nusantara and SESB to sell and purchase the energy generated by the facility for 21 years from the COD.

In Indonesia, Gadang has commenced full commercial operation of its 9MW mini hydropower plant in Lintau, Tanah Datar, in West Sumatera.

Foo said the second 4.5 MW run-of-river hydropower house unit of the plant was synced with the state-owned utility firm Perusahaan Listrik Negara (PLN) distribution grid system in Balai Tangah, Lintau Buo, on Sept 27.

The first 4.5 MW run-of-river hydro unit was synchronised to the PLN grid via a 4km overhead 20 kV transmission line after testing and commissioning were completed this year. The unit's COD was on July 7.

"The 9 MW mini hydropower plant is now generating a recurring revenue stream under a 15-year concession agreement," Foo said.

He said the plant, which uses water energy from the Batang Sinamar river upstream, has been meeting the PPA's requirements for PLN energy output. 

Gadang entered the hydropower industry in West Sumatra in June 2014 when it acquired a 60 per cent stake in PT Ikhwan Mega Power, the company in charge of the 9 MW hydropower concession.

Asian Utilities Private & Ltd, a wholly-owned subsidiary of Regional Utilities, owns 60 per cent of PT Ikhwan. The remaining 40 per cent equity is held by local investors.

The hydropower plant is constructed using the build, operate, and own concept, based on a 15-year concessionaire PPA agreed between PT Ikhwan and PLN.

TA Research said in August that it was maintaining Gadang's fiscal year 2024 and 2025 earnings forecasts and had introduced a financial year 2026 earnings forecast of RM25.7 million, representing an earnings growth of 7.9 per cent.

The brokerage said Gadang's outstanding construction order book, which stood at RM1.2 billion, could provide earnings visibility to the company at least for the next two years.

Excluding a RM10.6 million impairment loss on goodwill, a RM9.4 million impairment loss on concession, a RM7.2 million impairment loss on outstanding receivables and contract assets, and unrealised gain on foreign exchange of RM2.1 million, as well as other exceptional net losses of RM1.5 million, Gadang reported a FY23 core net loss of RM2.7 million.


Source: https://www.nst.com.my/property/2023/10/965600/gadang-sees-bright-future

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