GUNUNG (7676) - Gunung Capital Berhad - Hydro Pumped

GUNUNG (7676) - Gunung Capital Berhad - Hydro Pumped

Gunung Capital Berhad (Gunung - 7676) caught spot light in late 2013 when the company had announces on it's future plan on bringing in renewable energy through hydro electric into it's business portfolio. The company which saw turnaround when Dato Syed Abu Hussin came in with government contracts on land based logistic chartering services that provide services to the National Services.

Gunung had taken a bad shot in 2015 when the government decided to defer it's National Services due to adjustment to the government budget which is widely affected by the slump on global crude oil prices. However, the group had weather out the bad news in a quite diligent manner, managed to scratch through the financial year in a subdue manner.

However, now will be the time to see the harvest in the investment on the renewable energy sector, which is going to generate recurring income from the renewable energy generated from mini hydro electric plant.

Investment into Conso Hydro RE Sdn Bhd

In the 1st Quarter for 2016, Gunung, through it's 90% owned subsidiary, Gunung Hydropower Sdn Bhd, had purchased 50% stake into Conso Light Sdn Bhd for RM 2.5 million cash. Conso Light Sdn Bhd is the holding company with 95% stake in Conso Hydro RE Sdn Bhd, which is involved in developing, maintaining and operating of a 2MW hydro plant at Sungai Geruntum, Kampar, Perak.

Prior to the acquisition, Gunung had an indirect interest of 2.55% in Conso Hydro RE via it's 85% owned Pusaka Hijau Sdn Bhd, which own 60% of Perak Hydro. The investment will see Gunung having an effective stake of 45.3%

The company had secured a FIT (Feed-in-Tariff) approval from the Sustainable Energy Development Authority for it's Sungai Gerundum site with an annual availability of 10,000 MWh.

With the new rate of 26 cents per kWh, this will translate to RM 2.6 million of recurring income from the hydro plant once operation commence in the end of this year.

While the deal look like just another normal paper deal, investor that are familiar with in the renewable energy industry will know that the capital layout for 1MW of renewable energy through solar plant or hydro electric will require a capital layout of RM 10 million. As for Conso Hydro RE Sdn Bhd which carries 2MW mini hydro electric plant, that will require a capital investment of RM 20 million. Hence, a 50% stake will actually relate to a sum equivalent to RM 10 million.

For Gunung Hydro to acquire 50% in Conso Light which is worth RM 10 million in asset (based on Sungai Geruntum mini hydro site) for only RM 2.5 million, that will immediately revert to unrecognized profit of RM 7.5 million.

Aside from the Sungai Geruntum site that is almost ready for commission, Conso Hydro RE Sdn Bhd still have another 2 sites from Sungai Geroh with 1.1MW and Sungai Kundor with 0.5 MW. Both site carry an asset value of around RM 16 million, which had yet to be accounted for as well.

With the completion of all 3 sites, the 50% stake will be carrying hydro plant asset worth RM 18 million.

Do u want to invest in a company that had the way to pay RM 2.5 million cash to acquire asset worth RM 18 million ? You do the decision.

Continuous Share Accumulation from Major Shareholder and Director

Gunung had saw huge accumulation from Gunung major shareholder and director.

The notable individual is Dato Syed Abu Hussin, an executive chairman in the company and a division leader in UMNO, with the latest stint being a off period purchase of 3.3 million of mother share units at RM 0.42, and 2.6 million units of warrant at RM 0.12, which carries an exercise price of RM 0.40 (Translating to a total cost of RM 0.52 to convert into mother share). Currently, Dato Syed Abu Hussin have a total of 22.48% interest in Gunung Capital.

Others individual are Ooi Hock Lai, which gradual purchase for the past 2 years saw his stake increased to 10.27%, executive director Encik Beroz Nikmal with 3.55% and Encik Iskandar Ibrahim through his Aasia-East Capital Sdn Bhd investment vehicle, holding 4.79%.

With all this attractive information available, Gunung is still trading at a lowly 38-40 cents range, in which one of the reason is due to the liquidity and the volume of the company share. However, this will be the most appropriate time for any opportunist investor to lock in their position in Gunung as this stock will be poised to be a star shaker stock in 2017.

Keep watch for the next episode on what is actually brewing inside Gunung that you should not miss as an investor. More to come, don't miss it !

Bone's short term TP : RM 0.50

 

GUNUNG (7676) - Gunung Capital Berhad - Hydro Pumped

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