Friday, June 29, 2012

MUDAJYA ... Jun12

Mudajaya Group Bhd is expecting its 26% owned Indian associate company RKM Powergen Private Ltd to be profitable from 2013 after the coal-fired power plant there starts operations. The power plant is under construction and the full completion of the power plant is expected progressively in year 2013. Cashflows will be very positive and this will contribute substantially to the bottomline.

A 20% contribution to its bottomline from this associate company would be possible because the plant was constructed on the build, own and operate (BOO) model, with substantial recurring income from the operations of the power plant. The initial power purchase agreements that it had signed is for 20 years but beyond that there will be recurring income for it. The income will be substantial to the bottomline due to the tariffs that it had secured.

To recap, the company's Indian associate RKM Powergen had recorded a loss of RM12.21mil in the FY2011 ended December 31 because the plant has not started operations. Revenue starts coming in only when the associate starts selling power.

Mudajaya is undertaking a coal-based independent power plant producer (IPP) project in Chhattisgarh which comprises four generating units with a nominal capacity of 360 megawatts each to be set up in two phases.

Phase 1 of the IPP project is scheduled to completed by the year-end (2012) and ready for commercial operations by the first quarter of 2013. The remaining three units under Phase 2 is scheduled to come on-stream by the fourth quarter of 2013.

Mudajaya was also aiming to secure additional power plant projects whether through construction or acquisition of power plant assets in India which has a deregulated power industry.

It is looking at another power plant bigger than this current one. In India there is a supply shortage of power - a brownout situation unlike in Malaysia where we have a surplus (of power supply)). From 2012 - 2017, India aims to build another 75,000 MegaWatts (MW) of power plant.

In 2013 and 2014 it will have full recognition of the sale of power and will have surplus cash and will try to reinvest it to create even more income.

Meanwhile, the company was eyeing additional power plant, highway construction and water treatment opportunities in India, Vietnam and the Middle East and with bids for an additional RM3.6bil worth of projects aiming to top up its current outstanding orderbook of RM5bil.

The company was confident of securing about RM500mil to RM1bil of these bids and that a bulk of the bids would come from major local infrastructure projects.

Mudajaya currently derives 60% of revenue from overseas but aims to derive at least 60% to 70% of revenue from overseas recurring income in order not to rely on the cyclical construction sector.

The company could also likely be involved with a Chinese based company for the construction of the Prai Combined Cycle Gas Turbine (CCGT) power project.

The government is talking about 4,500 MW of gas fired and another 1,000 MW of coal fire.

Mudajaya Group Bhd is confident of securing projects worth between RM500 million and RM1 billion in 2012. For the first quarter 2012, it had secured projects worth about RM3.6 billion.

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