Sarawak Energy to finish six more projects by 2020

Saturday December 11, 2010

SIBU: Sarawak Energy Bhd (SEB) is focused on delivering six other hydro electricity dam projects besides the RM7.4bil Bakun and the RM3bil Murum dams before 2020. Chief executive officer Torstein Dale Sjotveit said these additions would represent 6,000- to 7,000-megawatt new capacity, which in turn would produce around 35,000 to 40,000 gigawatt hours of energy units. This is eight to nine times what we produce today, he said, adding that by 2020, SEB would be the leading producer of renewable energy in South-East Asia.

SESCO is a subsidiary of SEB.

Sjotveit said this clean renewable energy will power the development of the growing local markets, the establishment of new major industries and export to neighbouring countries like Brunei and Indonesia.

On the Bakun dam, he said SEB was committed to ensuring that energy from the dam, which is to be operational by next year, would be used to drive the state's economic growth. He also said SEB, on behalf of the state government, was now in the midst of a challenging negotiation with the federal government for Bakun's successful takeover.

On the Murum dam, he said its diversion tunnel was completed while the construction of the main dam was underway. On other projects, he said SEB had progressed negotiations with around 20 potential energy customers in Sarawak Corridor of Renewable Energy.

We are achieving price offering from them at 25% to 40% above what they offered last year. By this month too, we will be able to firm up agreements with at least four new customers in addition to the MEMC branch in Kuching and the Mukah Press Metal (second phase), he said.

Sjotveit is confident of a very strong financial performance for SEB this year. - Bernama
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SPNB awards RM1.7bil jobs for LRT extension

Saturday November 27, 2010


PETALING JAYA: Syarikat Prasarana Negara Bhd (SPNB) has awarded contracts worth RM1.7bil for the first phase (Package A) of the RM7bil light rail transit (LRT) extension project involving the Kelana Jaya and Ampang lines.

In a statement yesterday, SPNB, which was established by the Finance Ministry to facilitate, undertake and expedite infrastructure projects for the Government, said the main contractor facilities job for Package A of the Kelana Jaya line, valued at RM950mil, was awarded to Trans Resources Corp Bhd. The work will take 30 months to complete.

UEM Builders Bhd and Intria Bina Sdn Bhd were jointly appointed the nominated sub-contractors for the fabrication and delivery of segmental box girder jobs worth RM93.16mil, which is expected to take 21 months to complete.

Package A of the Kelana Jaya line will be a 9.2km extension from the Kelana Jaya station to Summit (Station 7). Package B will involve a 7.8km extension from Station 7 to the Putra Heights station.

Meanwhile, the main contractor facilities job for Package A of the Ampang line was jointly awarded to Bina Puri Holdings Bhd and Tim Sekata. Valued at RM634.64mil, the work will take 27 months to complete.

Bina Puri and Tim Sekata were also jointly appointed the nominated sub-contractors for the fabrication and delivery of segmental box girder jobs, which is valued at RM67.70mil and expected to take 19 months to complete.

Package A of the Ampang line will be a new 7.4km stretch from the Seri Petaling station to Station No. 5, while Package B will see a 10.3km extension from Station No. 5 to the Putra Heights Station.

SPNB said recipients of the main contractor facilities jobs would be responsible for all guideway sub-structure and main structure works, foundation work for stations and traction power sub-stations (TPSS), to launch and install segmental box girders and to supply and install parapets and noise barriers.

In addition, within the total contract value, the main contractors will also manage the nominated sub-contractors for contracts worth RM469mil (Kelana Jaya line) and RM305mil (Ampang line).

SPNB said the selection of the contractors was done through an open-tender process starting from November 2009. A total of 119 applications were received, but one was rejected due to failure to comply with application guidelines.

The tender for the facilities works under Package B for both lines will be called upon approval of the final railway scheme, which is expected by mid-2011.

With the appointment of the main contractors, it is expected that work on the line extension projects will start as soon as possible, SPNB said.

WTK ~ Current Year Prospect : 09 Q2

Current Year Prospects

Quarter 2, 2009

Timber

Japan, a major buyer for tropical hardwood timber products, returned to growth in the second quarter 2009, out of its longest recession since World War II. Growth in the world’s No. 2 economy is likely to continue in the coming quarters as companies restock inventories to meet a pick-up in demand at home and abroad. Notwithstanding this, going forward to the second half of 2009, the timber industry is projected to show improvement in both its demand and its selling prices. Selling price for round logs is expected to be firm given the dry weather condition in Sarawak. The low water level of rivers will mean a tighter supply of logs from Sarawak. Total plywood imported by Japan continued to drop during 2nd quarter 2009. This resulted in a significantly low inventory level in Japan and signs of tightening in the market are visible. Coupled with the expected improvement in housing starts, orders for plywood products are expected to increase during the second half of this year.

Given this, the Group remains cautiously optimistic of the industry and barring unforeseen circumstances, expects the Group’s results to improve second half of 2009. The group will also continue to monitor its various cost-cutting measures and its controls to conserve cash and focus on higher margin products.


Non-Timber Manufacturing & Trading

The current global economic downturn has affected the non-timber manufacturing and trading division, particularly with depressed demand in the primary export markets. With no sign of recovery in the near future, the division foresees the current weak market sentiment to continue until the end of 2009.

As the business outlook of the division remains challenging, the division shall endeavor to maintain its competitive advantage by streamlining its supply chain, focusing on its core products and strengthening branding to deliver differentiation to customers.

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WTK ~ Review of result : 09 Q2

Review of Results

For the quarter under review, the Group’s turnover was RM133.1 million as compared to RM226.1 million in the 2Q2008, representing a decrease of RM93.0 million (41.1%). The Group recorded pre-tax loss of RM3.4 million compared to pre-tax profit of RM23.5 million registered in 2Q2008. This is mainly attributed to the timber division.

Quarter 2, 2009

Timber

For the current quarter, the Group’s timber division registered a turnover of RM104.3 million, representing decrease of 45.4% or RM86.7 million as compared with RM191.0 million in the 2Q2008. This resulted in a pre-tax loss of RM3.7 million, a decrease of 116.4% compared to 2Q2008 profit of RM22.5 million. The drop is due to the continued economic slow-down and financial crisis world-wide.

On a year-to-date (YTD) basis, the timber division registered a turnover of RM190.5 million, representing decrease of 40.8%, as compared to the previous corresponding period of RM321.7 million. This is attributed to the decrease in logs and plywood sales volume of 24.2% and 47.7% respectively. Consequently, the division recorded a net loss of RM15.6 million, a substantial decrease of 160.2% or RM41.5 million when compared to RM25.9 million pre-tax profit registered in the previous corresponding period.

On a year-on-year (YOY) basis, average round log prices dropped by approximately 9.8% compared to prices registered in 2Q2008, whilst sales volume dropped by 36.8% compared to 2Q2008. On a YTD basis, average round log prices also dropped compared to the corresponding period, that is by approximately 9.1%. The Group’s key export markets for round logs is India (66%), Vietnam (10%), Japan (5%), China (5%) and the remaining 14% exported to Asian countries including Taiwan, South Korea and Hong Kong.

As for the Group’s plywood division, sales volume for the quarter in review decreased 42.1% as compared with 2Q2008, whilst, average selling prices decreased by 18.5% as compared to 2Q2008. On a YTD basis, average plywood prices were lower by 8.6% whilst volume decreased 47.7%. The Group’s key plywood markets for the quarter in review were Japan (80%) and Taiwan (20%).


Non-Timber Manufacturing & Trading

The non-timber manufacturing and trading division recorded a turnover of RM28.1 million for the quarter under review when compared to RM34.1 million in 2Q2008, a decrease in turnover of RM6.0 million (17.6%) due to soft market conditions, particularly in the primary export markets.

It recorded pre-tax profit of RM0.4 million when compared to pre-tax profit of RM0.5 million registered in 2Q2008. The lower pre-tax profit is mainly attributed to stiff competition affecting the demand of the Group's foil division.

On a year-to date basis (YTD), the division registered a turnover of RM53.1 million as compared to RM68.0 million in the previous corresponding period. The division’s YTD pre-tax profit also dropped by RM1.0 million to RM0.3 million as compared to the corresponding period last year (RM1.3 million). The decreases in both YTD turnover and pre-tax profit were mainly due to soft export market conditions explained above.


Material Changes for the Quarter Reported on as Compared with the Preceding Quarter

Quarter 2, 2009

Timber

The Group’s timber division registered a turnover of RM104.3 million, an increase of RM18.1 million as compared to 1Q2009. Its pre-tax loss decreased from RM11.9 million to RM3.7 million, an improvement of RM8.2 million (68.9%). This is mainly due to the slight improvement in the log division.


Non-Timber Manufacturing & Trading

The non-timber manufacturing and trading division recorded a turnover of RM28.1 million, an increase of RM3.1 million as compared to 1Q2009. It recovered from pre-tax loss of RM0.1 million to pre-tax profit of RM0.4 million, an improvement of RM0.5 million. This is mainly attributed to improvement in the division's product mix.

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Auto Sales ~ July 09 : 51,928

KUALA LUMPUR, Aug 21 (Bernama) --

Total vehicle sales in July rose by 14.7 per cent to 51,928 units as compared with June
but year to-date market continues to register 8.71 per cent contraction.

In July last year, total vehicle sales was 53,984 units.

Sales up to July 2009 was 303,012 units versus 331,957 units sold in the first seven months of 2008, said Malaysian Automotive Association (MAA).

Of the total July sales, 47,126 units were passenger vehicles and the remaining 4,802 units were commercial vehicles, said MAA in a statement Friday.

Production in July also dropped by 8.65 per cent to 47,073 units from 51,531 units in July 2008 while year to-date production only declined by 12.02 per cent to 276,915 units from 314,753 units last year.

Of the total vehicles produced in July 2009, 43,238 units were passenger vehicles while the remaining 3,835 units were commercial vehicles.

MAA said sales volume for August 2009 is expected to be maintained amid positive consumer sentiment and festive offers in conjunction with Hari Raya.

-- BERNAMA
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Ingress sees drop in Q2 net profit

Saturday September 5, 2009

Ingress sees drop in Q2 net profit


PETALING JAYA: Ingress Corp Bhd reported a 40% drop in net profit to RM2.95mil in the second quarter ended July 31, despite its revenue growing to RM177.7mil against RM155.54mil a year ago.

The group’s automotive division posted higher revenue of RM157mil during the period, but recorded lower profits. The company did not elaborate on why its operating margin had contracted during the quarter compared with the previous corresponding period.
Meanwhile, its power engineering and project (PEP) division made a slight loss before tax of RM0.5mil.

Ingress said it expected revenue from its automotive parts division would continue to rise, while sales volume from its premium car dealership was also projected to grow.
However, its overseas operations in Thailand and Indonesia may see lower sales.

“For PEP division, new awards are expected to materialise,” the company told Bursa Malaysia yesterday.

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Higher prices likely for steel and iron-based products

Saturday September 5, 2009

Higher prices likely for steel and iron-based products
By STEPHEN THEN

MIRI: Products that use steel and iron as raw materials may see an increase in price from mid-October, according to the International Trade and Industry Ministry.

Starting Oct 13, the Government will implement the mandatory screening on imported iron and steel items.

Deputy Minister Datuk Jacob Dungau Sagan said these overhead (screening) costs might eventually end up being added onto the costs of the end-products, and consumers might have to bear the cost.

“The mandatory screening will be carried out at all major ports in the country, like Port Klang, Johor Port, Kuching Port and Kota Kinabalu Port.

“This screening is vital as it will ensure that all the steel and iron products are of high standard,” he told a press conference yesterday.

He said Sirim Bhd would charge RM2,000 for every 100 tonnes screened.
Asked if the action meant Malaysia suspected that certain importers of iron and steel had been bringing in sub-standard quality raw materials, Sagan said that was a possibility as it had happened before.

Malaysia imports substantial amount of steel and iron raw materials, which are vital for the construction industry, from South Korea, Japan, Taiwan and China.
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CIMB lead arranger for Bakun's RM 10b bonds

Saturday September 5, 2009

CIMB lead arranger for Bakun’s RM10b bonds


PETALING JAYA: CIMB Bhd is the lead arranger for the RM10bil bond issue, to be raised on a staggered basis over eight years, for the consortium building the Bakun transmission cable project.

“I can confirm that Tenaga and the consortium members – Sarawak Energy Bhd and the Finance Ministry – will raise about RM10bil,” Tenaga Nasional Bhd (TNB) CEO Datuk Seri Che Khalib Mohamad Noh told Reuters yesterday.

StarBiz reported yesterday that the RM10bil would represent the debt portion while another RM2.5bil would make up the equity portion for the financing that would be raised on a project finance basis. The issuance of the first tranche would commence early next year and the jobs for the 1,000km high voltage direct transmission line and 680km undersea cable were likely to be tendered in the first quarter of next year. The Bakun Dam has a capacity of 2,400 megawatts (MW). By 2015, the first line is expected to be ready for transmission of 800-1,000MW of hydroelectricity to the peninsula. This will be followed by another 800-1,000MW by 2017 when the second line is completed. Over the long term, Sarawak plans to transmit more electricity to the peninsula.

On May 7 last year, TNB told Bursa Malaysia it had signed a heads of agreement with Sarawak Energy whereby the latter would develop electricity generation capacity to supply 3,000MW to TNB from 2017 to 2020 and a further 5,000MW from 2021 to 2030.This will be based on a schedule to be mutually agreed by both parties. The two parties also agreed to jointly collaborate and undertake feasibility studies to determine the inter-connection framework for the long-term power transmission from Sarawak to the peninsula.

Plastic Product makers poised for better year

Friday September 4, 2009
Plastic product makers poised for better year
By IZWAN IDRIS

They stand to gain from innovations and lower production costs

PETALING JAYA: It may be a tough year for the local plastic products manufacturing industry, with annual sales expected to drop 12% from a record RM16.24bil achieved in 2008.
However, a number of listed plastic product makers are on track for their best-ever year in terms of profits, as they reaped the benefit of product innovations and lower production costs.

“We had a good first half and the trend is sustainable at least for the rest of the year,’’ Tecnic Group Bhd executive director Ivan Gan told StarBiz recently.
Gan said this was due to cheaper resin costs compared with last year, while at the same time Tecnic managed to win “new customers and improve margins by providing value-added services’’.

For the six months ended June 30, Tecnic’s net profit jumped 65% to RM6.2mil from RM3.77mil in the previous corresponding period. Revenue improved 32% to RM61.4mil.
“The management has delivered a commendable track record by growing revenue and improving margins as guided,’’ Netresearch Asia said in a recent note.

Tecnic was projected to post a net profit of RM12mil for the year ending Dec 31, 2009 (FY09), the research firm said. That prediction, if met, will be the group’s highest profit so far.
“We believe the group will perform better in 2010 in tandem with the improving macroeconomic outlook,’’ Standard & Poor’s Malaysia (S&P) said in a recent report on Tecnic.
S&P projected Tecnic’s net profit would grow from an estimated RM11.3mil in FY09 to RM14.9mil in FY10.

Tecnic makes plastic beer crates, automotive parts and its own patented triple-locking pails used as lubricants packaging. The group’s clients are mostly multinational companies (MNCs).
At yesterday’s close, Tecnic has a market capitalisation of RM75mil.

Other companies in the industry that seem to flourish in these tough economic times are the plastic film makers that supply flexible packaging products mainly to large MNCs in the food and beverage sector.

Tomypak Holdings Bhd netted RM8.3mil in the six months ended June 30, which exceeded its full-year net profit of RM7.6mil in FY08.
The company attributed the strong results to “improved overseas market, higher sales of better quality products and lowest cost of goods manufactured over the past six months.’’

Bigger rival Daibochi Plastics and Packaging Industry Bhd made a net profit of RM10.8mil in the first six months on sales of RM113mil.

At the end of last year, Daibochi introduced a new sealing layer for its food and beverage customers that was cheaper to produce and speeded up packaging process.
“The management is confident that its current earnings trend is sustainable at least until FY10.
“This is given that orders are generally based on two-year contract terms and cost savings or increases are passed through directly on quarterly basis,’’ a local bank-backed brokerage said yesterday.

Annualising Daibochi’s half-year income would lift its full-year net profit to RM21mil. The group’s best year to-date was in 2003, when it made a net profit just shy of RM10mil.
Daibochi is the market leader in flexible packaging in the country, with an estimated market share of 30% to 35% based on revenue.
The company has a market value of RM108mil while Tomypak is worth RM56mil.
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RM 10 b Bonds to fund cable project

The Star
Friday September 4, 2009
RM10b bonds to fund cable project
By YAP LENG KUEN

First issuance to commence early next year

PETALING JAYA: Tenaga Nasional Bhd (TNB) and other members of the consortium responsible for the Bakun transmission cable project are likely to raise RM10bil worth of bonds on a staggered basis to fund the eight-year job.
StarBiz has learnt that the first issuance would commence early next year and the consortium was in discussion with the Government for a potentially higher credit wrap to ensure better investor appeal.

“The funding will be sourced domestically as liquidity is still strong. But the bond market is still conservative and investor appetite is still towards the AAA grades,’’ a source said.
In May, RAM Ratings had reaffirmed the long-term ratings of AA1(s) with a stable outlook for TNB’s repackaged Tenaga Income Securities represented by two tranches amounting to RM150mil.

However, a similar rating would not be good enough for the consortium to raise such a big amount and over the repayment tenure of the bonds which may stretch 20 to 25 years.
The consortium – comprising TNB, Sarawak Energy Bhd and the Ministry of Finance (MOF) – is likely to submit its first tranche of bonds for rating some time in the middle of next year.
No doubt the consortium will get to pay lower interest on a higher investment grade but the major benefit will be the cost savings passed back to consumers via a cheaper landed cost of electricity.

“This cost that includes generation and transmission is still being worked out,’’ the source said, adding that jobs for the 1,000km high voltage direct transmission line and 680km undersea cable were likely to be tendered in the first quarter of next year.

The shareholding structure is still not finalised, and neither is the actual amount to be raised.
“The actual figure has not been finalised but the amount will be raised by the consortium on a project finance basis which includes equity (20% or about RM2.5bil) and debt (80%),’’ the source said.

The debt portion is in the form of bonds in tranches depending on the funding requirements.
It will not be raised in one go but over eight years.
On comments that part of the financing should be in US dollars since a lot of imported materials will be used, the source explains that since the project revenue will be in ringgit, raising even a part of the bonds in US dollars will result in a long-term mismatch problem.
Moreover, for US dollar procurements, the consortium can take a short-term hedge.

“Anyway, the country is still enjoying a positive trade balance. So it will not have a negative impact on the balance of payments,’’ he added.

The cable project, which upon completion will result in the longest undersea transmission cable in the world, will cater for the 2,400-megawatt (MW) Bakun hydroelectric dam.
Electricity will be transferred via transmission towers from the RM6bil dam in the Kapit division in central Sarawak to the Bintulu division along the coastal belt and then southwards to the Kuching division. From the southernmost tip of Kuching, the last transmission tower will join the undersea cable that will transmit electricity across the South China Sea to Johor, and then to the rest of the peninsula.At least 10,000MW will be exported to Peninsular Malaysia.

TNB has been a strong advocate for hydro electricity which is more cost effective in the long run compared with electricity produced by coal-fuelled plants.

The fact that hydroelectricity will only be transmitted to the peninsula at the earliest by 2015 (when the first line is ready for take-up of 800 to 1,000MW) poses a challenge for the Sarawak government and MOF as the Bakun hydro generating plant is expected to be completed about two to three years earlier.

A lot of hope is pinned on high energy users such as Rio Tinto Alcan (which is investing in a RM8bil aluminium smelter together with Cahya Mata Sarawak Bhd); Tokuyama Corporation (which recently announced plans to set up a RM2.36bil polycrystalline manufacturing plant in Sarawak) and a potential foreign consortium for a solar panel plant at the Sarawak Corridor of Renewable Energy (SCORE).

In the long term, Sarawak hopes to be an exporter of electricity.
Sarawak Energy had projected some time back that the state would have a total capacity of 10,000MW, out of which 75% will come from hydro.
The projected peak demand through organic growth is expected to reach 1,500 MW, while smelter and other heavy energy users will take up about 4,000 MW. The rest would be exported from Bakun to the peninsula (2,400 MW) and neighbouring states (1,200 MW).