KUALA LUMPUR (Nov 11): Kelington Group Bhd is investing RM45 million to set up its second carbon dioxide gas recovery plant at the existing site in Kerteh, Terengganu.
The group said the existing plant is operating at more than 80% of its capacity, and so it is the right time to invest in the second plant to capture future opportunities.
The growth of the industrial gas business is expected to provide Kelington with a stable recurring income, the group added in a bourse filing.
Kelington said the construction of the plant to manufacture an additional 70,000 tonnes per year of beverage grade liquid carbon dioxide will commence in December, and it is expected to be completed by December 2023.
The development of the plant by its 97.19%-owned subsidiary Ace Gases Sdn Bhd will be funded through a combination of internally generated funds and borrowings, the group said.
Kelington said the investment to construct the plant is not expected to have any material effect on its net assets and earnings for the financial year ending Dec 31, 2022 until the completion of the construction. Thereafter, the depreciation cost of the new plant is expected to reduce earnings until capacity utilisation is optimised.
"However, the investment is expected to contribute positively to the earnings and net assets per share of Kelington Group for the financial year ending Dec 31, 2024," the group added.
Kelington's share price finished four sen or 3.03% higher at RM1.36 on Friday (Nov 11), bringing the group a market capitalisation of RM877.5 million.