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Stocks In Focus MY (KNM Group, Pestech Int’l, Sunway) – 13/04/15
Malaysia Daily Bulletin | 13 April 2015

KNM Group Announces FY2015 Contracts

  • KNM Group announced contracts worth RM204 million in total for financial year 2015 (FY2015), including Refinery and Petrochemical Integrated Development (Rapid) subcontractor contract from Toyo Engineering (Package 5) for RM120 million; Rapid subcontractor contract from Technicas (Package 3) for RM54.6 million and Turkmengas petrochemical complex project for RM29 million. Contracts’ period are for between 12 to 18 months.
  • KNM has submitted bids for subcontractor jobs for other packages of refinery plant and engineering, procurement, construction and commissioning contract for tank farms and other associated facilities.
  • The recent joint venture with Korea-based Hansol Corporation will be bidding for some biomass projects in Malaysia. The contract size is ranging from RM100 million to RM300 million.
  • Significance: KNM, being one of the largest process equipment manufacturer should be one of the main beneficiaries of the Rapid project. KNM is expecting a continuous contract newsflow, believing in a good chance to secure more subcontractor jobs from some refinery packages in the near term.

    Pestech International Ready To Clinch RM334 Million Deal

    • Pestech International‘s 60 percent-owned subsidiary Diamond Power took over the job of developing a 230kV transmission line between Kampong Chom and Kratie from Cambodian-state owned Electricite Du Combodge (EDC).
    • Transmitting electricity from the upcoming Hydro Power Lower Se San 2 plant in Stung Treng to Kratie and Kampong Cham, Pestech will get a 25-year concession to operate the line and stand a good chance in clinching the engineering, procurement and construction (EPC) portion of the project.
    • Lack of players in the South-East Asian region opens doors for Pestech, giving them an edge to compete with bigger companies from South Korea and China. It has secured RM78 million worth of contracts year-to-date, compared to the total value of RM406 million in 2014.
    • Significance: If given the deal, Pestech’s order book could be boosted 43 percent to RM815 million from RM570 million. Pestech’s gearing is estimated to increase to 0.87 times by the financial year ending 31 June 2017.

      Sunway To Acquire Winstar Trading and PND Hardware & Trading

      • Sunway is proposing to acquire Winstar Trading for RM130.9 million and PND Hardware & Trading for RM7 million ($2.6 million).
      • The acquisitions will be completed in three tranches, where Sunway first acquires 60 percent stake by the second quarter of 2015 (2Q15), then an additional 20 percent stake by 2Q17 and 2Q18.
      • There is profit guarantee for financials year 2015 to 2017 of RM15 million per annum for Winstar and $250,000 per annum for PND, implying good prospects for the hardware trading businesses.
      • Significance: The acquisitions will complement Sunway’s trading and manufacturing division as the acquired companies are market leaders with over 30 years of experience in the wholesale hardware market with extensive distribution networks and customer bases.

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