KUALA LUMPUR: Loss-making Comintel Corp Bhd is looking to turn around its operations in its financial year ending Jan 31, 2017 (FY17). It is pinning its hope on the commissioning of its 2mw municipal solid waste to an energy plant next month.
“We have the approval of the Sustainable Energy Development Authority (Seda) of Malaysia for the commissioning of the plant, and we have also signed a power purchase agreement (PPA) with Tenaga Nasional Bhd for a concession period of 16 years,” said its deputy chief executive officer Loh Hock Chiang.
He noted that the PPA will contribute a revenue of RM7 million a year to Comintel (fundamental: 0.35; valuation: 0.9) and will help it return to the black.
“As the plant is due for commissioning in June this year, we may not be able to return to profitability so soon in FY16 [as there will be initial expenditures], but in FY17, we are confident that it will drive our return to the black,” said Loh.
The plant, in which the company has invested RM18 million, is part of its plan to diversify into the green energy sector, according to Loh.
“Comintel is known for its core businesses of electronics manufacturing services (EMS) as well as the provision of system integration solutions. Now, we are looking into diversifying our operations into the green energy sector through our energy plant,” he told The Edge Financial Daily in an interview.
The power plant, located in Kuang, Rawang, uses Comintel’s gasification system, which converts biomass and solid waste into high quality synthetic gas, which then produces electric and thermal power.
Another unique factor of the plant, according to Loh, is its ability to produce energy without polluting the environment.
“In the conversion of waste to energy in our plant, we do not emit smoke, discharge tar or polluted water into the environment. The only by-product from the process is biochar, which has outstanding market value as a soil enhancer, water filtration material and heating fuel,” he said.
For FY15 ended Jan 30, Comintel reported a net loss of RM1.34 million, which was narrowed by 66.3% compared with its net loss of RM3.98 million in FY14. It revenue decreased by a marginal 1.7% to RM309.54 million, compared with RM315.03 million in FY14.
According to Loh, the company’s losses in the last two years were mostly attributed to its communications and system integration segment, which was in the red due to the cut in fiscal spending by the government in telecommunications and information technology infrastructure projects.
Under its communications and system integration segment, Comintel also provides the Tetra Digital Trunked Radio System to Malaysia Airports Holdings Bhd, covering all the international airports in Malaysia, as well as the Ampang light rail transit extension line.
However, Loh said that Comintel will not neglect its core business of EMS, even with its diversification into green energy.
Loh added that the current weak ringgit against the US dollar has benefited the company, as most of its exports are to the US.
The stock was featured by The Edge Financial Daily as a Stock with Momentum on March 25.
Comintel’s net assets per share stood at 68.7 sen per share as at FY15. Its share price rebounded from its low of 17 sen in mid-December to 26.5 sen last month. The stock closed at 22.5 sen, with a market capitalisation of RM35.7 million.
The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.
This article first appeared in The Edge Financial Daily, on May 5, 2015.