BRIGHT PROSPECTS: Sarawak Cable is expected to secure a number of transmission jobs, including the lucrative 500kV backbone power line in Sarawak (transmission package that is worth approximately RM1 billion) from SEB, now that the GE13 is over.
KUCHING: Sarawak Cable Bhd (Sarawak Cable) is expected to secure a number of transmission jobs, including the lucrative 500 kilovolts (kV) backbone power line in Sarawak (a transmission package that is worth approximately RM1 billion) from Sarawak Energy Bhd (SEB), now that the 13th General Election (GE13) is over.
According to AmResearch Sdn Bhd (AmResearch) in a recent research report, with the political uncertainties doused down, Sarawak Cable is expected to resume its long-delayed projects while other projects are expected to be awarded to the company soon.
“We recently hosted a meeting for Sarawak Cable that was attended by institutional funds. We came away with a more upbeat view on Sarawak Cable, premised on Sarawak Cable securing the 500kV backbone package, which is expected to be awarded by year-end and acceleration of state government’s rural electrical scheme (RES) to meet state’s original target of 95 per cent by year-end (currently approximately 60 per cent),” the research firm highlighted.
The long delayed 500kV is expected to be awarded this year as there is urgency to meet the needs of power intensive industries, notably in Sarawak Corridor of Renewable Energy, it added.
“We understand that the award of the job is only awaiting state’s approval. We do not foresee any problem as Sarawak Cable is the biggest transmission electronic pressure control (EPC) in the state; and SEB is a major shareholder of Sarawak Cable,” the research firm opined.
Apart from the 500kV job, AmResearch said that Sarawak Cable is also expected to benefit from RES, as only 60 per cent is completed and RM400 million worth of jobs is expected to be tendered out this year.
It further noted that Sarawak Cable is the dominant supplier of fabricated steel poles and cables, via units Sarwaja and Universal Cable respectively.
AmResearch further explained, “We assume that Sarawak Cable will get 80 per cent of the RES jobs to be tendered out this year. In anticipation, management indicates it has ramped up production with 100,000 pieces of poles currently in stock.”
In addition, Sarawak Cable has also expressed interest in a number of smaller transmission jobs with a potential total value of approximately RM400 million, the research firm pointed out. It added, the smaller transmission jobs include the Tanjung Manis-Bintulu and Mambong-Kalimantan lines.
“Sarawak Cable currently has an order book of RM687 million, with an outstanding amount of RM202 million.
“We have a conservative order book assumption of RM1 billion for financial year 2013 forecast (FY13F), including the 500kV line, to be progressively-recognised in FY13F to FY15F.