When it comes to infrastructure plays in Sarawak, Sarawak Cable Bhd (SCB) is a force to be reckoned with. Since its inception in 1980, it has grown to become a fully integrated power cable and wire manufacturer.
SCB is tipped to be one of the biggest beneficiaries of the Sarawak Corridor of Renewable Energy (Score) as it is one of the few companies with the capability to build transmission lines and substations and should accordingly, bag quite a few of the infrastructure jobs in the pipeline.
“With the Bakun dam expected to be fully commissioned by mid-2013, new transmission power lines and power stations will need to be built in the state. SCB will be a key beneficiary as the state government looks at electricity plans for the rural areas as well,” said an analyst.
According to analysts, SCB is expected to bag the 500kV Bunut-Kuching line job, which will be the main trunk line connecting all the smaller transmission lines in Sarawak. To give it more clout in bidding for this project, SCB inked a pact with power giants Sinohydro Corp (M) Sdn Bhd, and India’s KEC International Ltd.
AmResearch said the agreement has upped SCB’s bargaining power and it is most likely to win the contract to build the 500kV line, estimated to be valued at RM3 billion. The winning bid should be announced by year-end.
|Toh is confident of securing job in the 500kV Bunut-Kuching line.
|New transmission power lines and power stations will be needed when the Bakun dam is fully commissioned by mid-2013.
SCB’s managing director and CEO Aaron Toh recently told The Edge Financial Daily that the company is confident of securing the job as it has the expertise to complete phase 1 of the project by its tight deadline of March 2014.
Apart from the 500kV line, SCB is also expected to secure some jobs under the state government’s rural electrification scheme (RES) and is targeting 10% to 20% of the RM1 billion annual allocation. The federal government had allocated RM5.7 billion for infrastructure projects in Sarawak under the National Key Results Area (NKRA), of which a third is estimated to be for electricity-related projects.
SCB also recently signed memoranda of understanding (MoUs) for two 10MW mini-hydro projects in Sumatra as part of its move to garner future recurring income streams. Besides that, SCB is eyeing other power transmission projects in Borneo such as the Kuching-Kalimantan line, Miri-Baram line, and linkages to Brunei.
It had also recently teamed up with ABB Malaysia Sdn Bhd to tender for the Samajaya substation project, and had secured its first transmission contract — the 257kV Murum-Murum Junction line worth RM99 million.
Incorporated in 1980, SCB’s wholly owned unit Universal Cable (Sarawak) Sdn Bhd (UCS) started as a trading company for power cables and wires. In 1982, it began manufacturing low-voltage power cables and wires at its plant in Pending, Kuching.
SCB debuted on the Main Board of Bursa Malaysia on May 25, 2010, with an offer price of 70 sen per share.
The company is backed by well-connected shareholders who wield considerable clout within the state. For instance, state-owned Sarawak Energy Bhd (SEB), has a 22% stake in the SCB. SEB is an important shareholder as it has been given the mandate to implement the power infrastructure masterplan under Score by the state government.
Datuk Seri Mahmud Abu Bekir Taib, the son of Chief Minister Tan Sri Taib Mahmud, holds a 19% stake in SEB. Abu Bekir is SCB’s non-independent non-executive chairman.
Leader Universal Holdings Bhd, the largest cable and wire producer in Asean , has a 15% stake in SCB. It has been instrumental in developing SCB’s technical capabilities as well as supply it with mid-to large-sized power cables and wires for more than 20 years.
Since it was listed last year, the company has been on an acquisition trail. Last year, it acquired a 75% stake in Sarwaja Timur Sdn Bhd, a company specialising in manufacturing and galvanising steel towers. The purchase proved to be a good move, as Sarwaja boosted the group’s earnings since it came on board last October.
SCB recently proposed to acquire the remaining 25% stake in Sarwaja for RM11.02 million, and is also looking to snap up a 65% stake in Trenergy Infrastructure Sdn Bhd (TISB) for RM24.45 million. TISB is involved in constructing power transmissions lines.
Once it completes these acquisitions, Toh said SCB will become a fully integrated outfit with stronger bargaining power when bidding for future jobs. The new acquisition will double its order book to RM384 million, with RM204.61 million coming from TISB alone.
This article appeared in The Edge Financial Daily, September 14, 2011.