Pestech gets RM1.59bil concession in Cambodia

KUALA LUMPUR – Power system engineering and technical solutions provider Pestech International Bhd has become a concession owner in Cambodia after it secures a project worth RM1.59bil.

It told Bursa Malaysia yesterday that it had signed an agreement with Cambodia’s Mines and Energy Ministry and state-owned Electricite Du Cambodge (EDC) to transfer the ownership of the 230kV Kampong Cham – Kratie Transmission System project to its 60%-owned Diamond Power Ltd.

The build-operate-transfer project to bring electricity from the upcoming Hydro Power Lower Se San 2 hydropower plant in Stung Treng to Kratie is for a 25-year period.

“Diamond has now procured all the necessary legal documentations, which signify the full and effective ownership of the project,” it said.

It expected the project to be completed on Nov 30, 2017.

During the first three years of commercial operation starting end-2017, EDC will pay Diamond US$12.25 mil (RM44.37mil) per year.

From 2020 onwards, Diamond will be paid US$18.22mil (RM66mil) annually until the end of the concession.

“This marks the entry of the Pestech group as an independent power transmitter on a concession basis,” it said.

Pestech expected the project development to cost US$92.21mil (RM334mil).

For starters, EDC had signed a power transmission agreement (PTA) for the development of the project. Later on, the project Diamond, EDC and Cambodia’s Mines and Energy Ministry has signed novation agreements for the PTA and implementation agreement. The novation agreements were executed this Monday and completed yesterday.

“Pestech does not foresee any exceptional risk other than the normal operational risk associated with the project. The company will take necessary steps to mitigate the risks as and when it occurs,” it added.

Its share price has more than doubled from RM2.49 a year ago.

Before the announcement of this concession, Pestech has gotten three projects totalling RM78.3mil since beginning of the year.

Kenanga Research has an “outperform” call on the counter with a target price of RM5.04.

It closed 21 sen or 4.08% higher at RM5.36 giving it a market cap of RM934.65mil.

At current price, its price-to-earnings (P/E) is 31.4 times while forward P/E is 19.85. – The Star

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