Friday, September 17

Sarawak Cable wins two 500kV packages

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KUCHING: Sarawak Cable Bhd’s (Sarawak Cable) announces that it won two 500kV packages worth RM620 million from Sarawak Energy (SEB).

On Friday, Sarawak Cable had announced on Bursa Malaysia that its wholly-owned subsidiary Trenergy Infrastructure with joint venture (JV) partner Sinohydro Corp had received a letter of intent (LOI) from SEB its intention to award the two packages of the 500 kilovolts (kV) transmission line.

According to AmResearch Sdn Bhd (AmResearch), the packages consist of the Mapai-Lachau and Lachau-Tondong lines worth RM353 million and RM266 million, respectively.

Quoting Sarawak Cable, AmResearch highlighted that the formal contract agreements for the two packages are expected to be entered in due course. Commencement of works is slated for next month with completion periods of 23 months and 25 months for the Mapai-Lachau and Lachau- Tondong lines, respectively.

“The award confirms our previous reports that the 500kV line (packages now worth a total of RM1.2 billion) was expected to be awarded in August or September.

“We expect contributions from the project to begin in the fourth quarter of financial year 2013 (4QFY13),” AmResearch added in a recent research note.

Together with the 132kV Tudan-Miri airport job it secured in June, Sarawak Cable has won a total of RM650 million new transmission jobs this year, leading to the research house having an order book assumption of RM1 billion for its FY13 forecast.

It further added, Sarawak Cable can now look forward to two more projects that might be awarded in the near term, including the Tanjung Manis-Bintulu and Manbong-Kalimantan lines worth an estimated RM400 million.

As for a cross-border transmission line linking Sarawak and West Kalimantan, AmResearch noted that the Indonesia government and Asian Development Bank (ADB) are moving forward with plans to build it.

Quoting ADB, Sarawak Cable said the project would build a 145 kilometres distribution line within West Kalimantan, and another 83 kilometre cross-border line connecting Sarawak and West Kalimatan.

ADB has to date secured a US$100mil loan for the Kalimantan side and is preparing a second loan to finance the project for the Malaysian side.

With such prospects in the near future, AmResearch has maintained its ‘buy’ recommendation on Sarawak Cable (SCB) with a sum of parts-derived fair value of RM2.33 per share.