Mestron biogas plant op starts Q2

Mestron biogas plant op starts Q2

Group managing director Por Teong Eng said the yearly revenue expectation is based on 36 cents per watt secured and stressed that this renewable energy (RE) division's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins could

KUALA LUMPUR: Mestron Holdings Bhd (MHB) has set plans to commence its newly-acquired biogas plant in the second quarter of this year and expects a yearly revenue of around RM6 million from this division.

Group managing director Por Teong Eng said the yearly revenue expectation is based on 36 cents per watt secured and stressed that this renewable energy (RE) division's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins could reach 60 to 70 per cent due to its strategic placement near a palm oil mill, securing the source of raw materials.

"After this, we will work on the capacity expansion of this biogas plant to increase its total capacity to around 3.2MW, from the current 2.0MW. This would then bring our revenue to RM9 million," Por told The New Straits Times.

In September last year, MHB, via its wholly-owned subsidiary Mestron Energy Sdn Bhd (MESB), acquired the entire stake in Liziz Biogas Sdn Bhd (LBSB) from Maxcom Engineering Sdn Bhd for RM3 million.

LBSB is involved in generating biogas electricity, and according to Poh, the capital expenditure for this biogas plant is RM12.5 million.

When asked about significant projects the company will undertake in the RE sector in 2022, Poh said MHB aims to have a power generation capacity of 10MW within five years, including the solar division.

"We are involved in solar power installations by providing financing for clients who want to install solar panels on their premises.

"We will then share the profit that the company could derive from the installation," he said.

Moving on to telecommunication towers, Poh said MHB's focus is to continue supplying to domestic players in the near term.

"In fact, after Jaringan Digital Negara (JENDELA) project, our focus will be on the 5G telco towers. We expect it to kick start very soon, now that the government has decided to maintain the single wholesale network (SWN) for Malaysia's 5G project.

"As of now, Malaysia will be our primary focus. The 10-year development for 5G infrastructure will keep us busy. Our expertise in providing customisable telco poles puts us in a good position to secure the orders.

"Based on the estimation of RM12.5 billion cost required for the network equipment and infrastructure needed for 5G and over ten years of development, this augurs well with the prospects of MHB," Poh said.

"We also have a track record in supplying the telco towers to East Malaysia. Our relationship with the main contractors there will give us an edge over the plan by the government to have all the telco towers fully completed by the fourth quarter (Q4) of 2022 to offer 4G services," he said.

For the third quarter (Q3) of its financial year ended 30 September 2021 (FY21), MHB's net profit was down by 67.5 per cent year-on-year (YoY) to RM1.0 million compared to RM3.1 million in the same quarter a year ago.

The lower net profit is in line with the decrease of 25.2 per cent YoY in its revenue to RM14.3 million from RM19.1 million in Q3 FY20.

For the first nine months (9M) FY21, MHB's net profit was down by 31.6 per cent YoY to RM2.6 million, while revenue declined by 3.1 per cent to RM36.9 million compared to the corresponding period a year ago.

Por said the results in this quarter was mainly impacted by the enforcement of MCO 3.0 and the National Recovery Plan (NRP), whereby the company was only able to resume its operations on 22 August 2021.

Moving on to the next catalyst, Poh said MHB would also focus on offering poles to the smart metering programme for electricity under Tenaga Nasional Bhd as the smart metering system requires a communications monopole to be installed for the substation and meters to communicate.

https://www.nst.com.my/business/2022/03/781718/mestron-biogas-plant-op-starts-q2