KUCHING: Sarawak Cable Bhd (Sarawak Cable) is well-positioned to capture future contracts to supply power cables and install power transmisson lines throughout Malaysia.
AmResearch Sdn Bhd (AmResearch) in a report yesterday said the company’s prospects in the peninsula will be coming from national power utility provider, Tenaga Nasional Bhd (TNB) where the latter will be calling for tenders in the first quarter of this year for distribution lines with an estimate total value of RM1.2 billion per year.
The research firm noted that TNB had earlier this month called for tender for the double-circuit 500 kilovolt (kV) overhead line believed to be from Ayer Tawar to Tapah.
It observed that the tender has just closed with the contract award expected within six months’ time.
AmResearch noted that the proposed 500kV transmission line is crucial as it will connect the northern and central power lines in Peninsular Malaysia.
The research firm added that the line will also link the supply from TNB’s coal-fired power plant 3A and 3B projects to the national grid.
AmResearch said the 3A power plant project in Manjung, Perak and 3B power plant project in Jimah, Negeri Sembilan are expected to be completed by 2017 and 2018 respectively.
Citing information from the Energy Commission, AmResearch said the 500kV Ayer Tawar-Tapah line is expected to be completed by September 2017 while another 500kV line from Lenggeng, Negeri Sembilan to Yong Peng East in Johor is expected to be completed by Dec 2019.
AmResearch added that the Lenggeng-Yong Peng line is crucial as Project 4A at Pasir Gudang, Johor is expected to be ready by 2019.
Meanwhile, the research firm observed that there will be seven packages for the 500kV power transmission lines worth RM2 billion to be called for tenders soon and Sarawak Cable has the potential to secure some of the jobs.
Besides that, AmResearch noted Sarawak Cable is also looking to supply power cables for the upcoming Light Rail Transit Line 3 (LRT 3) and power project at the Refinery and Petrochemical Integrated Development (RAPID) in Pengerang, Johor as those projects required high voltage cables.
Sarawak Cable is currently the sole producer of 275kV underground power cables in Malaysia which are required for upcoming power jobs.
For power jobs in Sarawak, the research firm said Sarawak Energy Bhd’s capital expenditure plans for the state has reaffirmed more power jobs and opportunities in Sarawak for at least the next 10 years.
The development will also ensure that Sarawak Cable, as one of the power cable suppliers in the state will get the opportunity to secure some power jobs.
As for the financial performance of Sarawak Cable, AmResearch believed that the company’s financial results for the fourth quarter of 2014 (4Q14) due in February to be muted due to delay in recognition in earnings from its 500kV backbone transmission line project for the Mapai-Lachau and Lachau to Tondong lines.
Nonetheless, the research firm expects the company’s earnings to recover strongly this year due to full recognition for the 500kV job as well as the progress billings from the RM493 million Balingian coal-fired power-plant job and the RM257 million power transmission line job in Pengerang, Johor.
Apart from that, AmResearch noted Sarawak Cable will also witness full year contribution from its acquisition of Universal Cable (M) Bhd and Leader Cable Industries Bhd in this year’s financial results.
With an outstanding order book of approximately RM2.2 billion and tender book of more than RM700 million, AmResearch has reaffirms its bright outlook for Sarawak Cable this year.