PESTECH going massive into South-East Asia
AS a distinct segment utility infrastructure firm with robust growth plans, PESTECH International Bhdis another small-cap play to the home utility sector.
It’s also a less expensive proxy to the opposite “massive boys” within the sector, judging by ahead valuations as compiled by Kenanga Analysis.
PESTECH, which has been deriving its income nearly totally from Malaysia and Cambodia, is looking for an even bigger presence within the high-growth South-East Asian area.
To realize this, the group goals to capitalise on the sturdy demand for energy infrastructure in nations like Cambodia, the Philippines and Papua New Guinea.
Given its confirmed monitor document of commissioning over 565km of electrical transmission strains and cables, PESTECH ought to discover it well-positioned to bid for such regional initiatives.
PESTECH, whose shareholders embrace Norges Financial institution or the supervisor of Norway’s Pension Fund, can be going massive into the rail electrification enterprise regionally.
Aside from Malaysia, it’s already eyeing regional rail initiatives in Asean, leveraging on the group’s current full fleet of rail electrification crops and machineries.
In Malaysia, PESTECH has been concerned within the Gemas-Johor Bahru Southern double monitor undertaking and the Mass Speedy Transit Line 2.
Hong Leong Funding Financial institution (HLIB)Analysis has beforehand stated that PESTECH has “good probabilities” to safe contracts for upcoming Malaysian mega-rail initiatives resembling MRT Line 3, the East Coast Rail Hyperlink, the high-speed rail and the Klang Valley Double Monitoring (Section 2).
The facility infrastructure and rail electrification segments contributed 61% and 35% of PESTECH’s income within the monetary 12 months ended June 30, 2021 (FY21), respectively.
Going ahead, PESTECH additionally hopes to reap the benefits of the rising alternatives within the renewable vitality (RE) and electrical car (EV) infrastructure segments regionally.
In its 2021 annual report, the group stated it needs to enterprise additional into the world of photovoltaic photo voltaic era, waste-to-energy, sustainable mobility options and autonomous non-fossil gasoline based mostly distributed microgrid energy provide options.
It’s noteworthy that PESTECH’s work for its first large-scale photovoltaic photo voltaic plant (LSS) of 20MW positioned in Bavet Metropolis, Svey Rieng Province, Cambodia, has began.
PESTECH’s goal to leverage on RE alternatives got here on the proper time, as Asean targets to realize a RE capability of 35GW to 40GW by 2025.
On the EV infrastructure entrance, PESTECH is offering EV charging stations in industrial buildings, condominiums and alongside the highways.
HLIB Analysis has beforehand stated that PESTECH’s enterprise into EV infrastructure bodes effectively with Malaysia’s Low Carbon Mobility Blueprint 2021-2030 to speed up nationwide EV adoption price.
In FY21, PESTECH reported double-digit development in each income and backside line, regardless of the Covid-19-related challenges.
Income hit a document excessive because it grew by 11.5% year-on-year (y-o-y) to RM889mil, whereas web revenue expanded by nearly 29% y-o-y to RM66.2mil.
Revenue margin in FY21 additionally improved to 12%, as in comparison with 8% within the earlier monetary 12 months.
Shifting ahead, the group is effectively positioned to maintain its monetary efficiency momentum, backed by its excellent order e-book of RM1.76bil as at June 30, 2021.
“The contribution of the order e-book continued to be diversely generated from among the many Asean area according to the technique of the group to have a well-spread enterprise publicity on this geographical space,” it stated within the annual report.
Because the starting of 2020, PESTECH has secured 5 contracts cumulatively price RM438.61mil, which embrace a traction energy provide contract for the Malaysia-Singapore Speedy Transit System.
Not too long ago, PESTECH received a RM157mil contract from the Nationwide Grid Corp of the Philippines (NGCP) for the South Luzon Substations upgrading undertaking.
Below the contract, the group will ship engineering, procurement, building and commissioning (EPCC) works involving seven substations, with undertaking period starting from 180 to 600 days.
It’s noteworthy that that is PESTECH’s sixth contract from the NGCP since 2016.
Kenanga Analysis analyst Teh Kian Yeong is constructive in regards to the contract win and sees the award as an indication of NGCP’s confidence in PESTECH to ship the undertaking.
“Pre-tax revenue margin for this new contract continues to be inside the 9% and 11% vary.
“We see huge potential within the Philippines for transmission line and substation EPPC initiatives, as 30% or 28 million of its inhabitants are nonetheless with out entry to electrical energy provide,” he says in a be aware issued on Nov 23.
Wanting forward, Teh expects a “seasonally weaker” first-half of FY22. That is particularly in Cambodia, which is dealing with a wet season, deterring undertaking progress.
“We proceed to love this area of interest utility infrastructure play which might probably profit from the revival of mega-projects domestically and the fast-growing vitality infrastructure growth market in Indo-China.
“As such, we proceed to price the inventory an ‘outperform’ with an unchanged goal worth of RM1.39,” says Teh.
12 months-to-date, the PESTECH inventory is up by 6.4%, outperforming key utility gamers resembling Tenaga Nasional Bhd, YTL Power International Bhdand Malakoff Corp Bhd which have declined in the identical interval.
Yesterday, PESTECH reported that its web revenue for the primary quarter of FY22 ended Sept 30 fell by 21.2% y-o-y to RM11.87mil.
Income dropped by 16.5% y-o-y to RM207.81mil.
“The group’s income displays the stage of undertaking progress through the quarter below evaluate”, says PESTECH.