KUCHING: Sarawak Cable Bhd (Sarawak Cable) foresees Indonesia as its upcoming key market to sustain the earnings of the company.
Sarawak Cable’s managing director Aaron Toh believed that Indonesia is a hugely untapped market for the power industry as there is substaintial demand for electricity especially in Sumatra, Indonesia.
Thus, the company is eyeing more jobs from the Indonesian market in the form of power generation and supply of cables for transmission lines to enhance the growth of the company over the long term.
“There is a serious shortage of consistent power supply especially at Sumatra. Besides, the Indonesian government has committed to invest more in developing infrastructure and planned to build up to 35,000 megawatt (MW) of electricity over the next five years.
“(Therefore), we have to position ourselves and move fast to capture the opportunity in the Indonesian market. We expect the Indonesia market to be an exciting market both for power generation and transmission lines business.
“We are targeting to achieve 100 MW of power generating capacity (from mini hydro power plants mostly in Sumatra, Indonesia) within the next five years,”he told reporters after announcing the company’s first quarter 2015 (1Q15) financial results at a hotel here late Friday.
Toh disclosed that the company’s Indonesian unit PT Inpola Mitra Elektrindo (IME), is developing a mini hydro power plant with generation capacity of 10MW in north Sumatra.
The project is on schedule for completion this year and will start generating electricity next year.
Sarawak Cable is currently negotiating with Indonesian utility body, Perusahaan Listrik Negara Persero (PLN) over the power purchase agreement (PPA) for the supply of electricity next year.
Toh believed that the PPA with PLN is expected to be finalised in the next three to six months’ time.
He revealed that Sarawak Cable is also eyeing two additional mini hydro power projects in Sumatra in the near future while feasibility studies for the two projects have been conducted.
The group hopes to achieve at least 30 per cent for the supply of cables for its export market in the future.
At present, the group supplies cables mainly to the Oceania region and Asean region which include Myanmar, the Philippines and Singapore.
Commenting on the company’s 1Q15 results, Toh said Sarawak Cable had achieved an outstanding performance compared to the corresponding quarter last year.
Toh believed that the company’s propsects will be better in the second half of the year supported by improved progress billing from existing projects.
Sarawak Cable’s year-to-date order book and tender book stood at approximately RM2 billion and RM1 billion respectively, he added.
Moreover, the valuation of the company remains attractive as the company’s share price of RM1.37 as of last Friday’s closing translated into price-earnings-ratio (PER) of below 10 times.