Indonesia: Bina Puri unit makes strong debut on IDX

Indonesia: Bina Puri unit makes strong debut on IDX

After close to a year's delay, Bina Puri Holdings Bhd's Indonesian power
subsidiary PT Megapower Makmur Tbk made a strong debut on the Indonesia
Stock Exchange (IDX) yesterday, when it opened 70% above its offer price.

PT Megapower debuted at 340 rupiah (11 sen), compared with its offer price
of 200 rupiah. At market close, the stock stayed firm at 340 rupiah, valuing
it at 277.78 trillion rupiah. The listing raised 49 billion rupiah for PT
Megapower.

PT Megapower was supposed to be listed in August 2016 but the plan was
delayed as Bina Puri needed to reconcile certain accounting transactions due
to differing accounting policies between Malaysia and Indonesia.

PT Megapower is 80%-owned by Bina Puri Power Sdn Bhd, which is 80%-owned by
Bina Puri. The company is in micropower generation and the procurement of
goods and services for power generation.

It currently produces electricity at its 10ha 4.2mw hydropower facility in
Makassar, Sulawesi for government-owned electricity distributor, PT
Perusahaan Listrik Negara (PLN).Besides the Makassar plant, it has eight
diesel power plants in Indonesia with a combined capacity of about 54mw.

Indonesia's government launched the 35,000mw programme in 2015 to meet the
national demand for electricity, and expects 23% of electricity to be
sourced from renewable energy by 2025. According to Bina Puri's group
executive director Datuk Matthew Tee Kai Woon, about 60% of Indonesia's
population currently have access to electricity.

Eager to meet the country's electricity demand, Bina Puri is looking at
developing two more hydropower plants in Sulawesi, according to PT
Megapower's chief executive officer Kang Jimmi. The locations have been
identified.

"We will proceed with doing our studies and research, and move on to the
design and planning stage," Kang told reporters after PT Megapower's listing
ceremony here yesterday. "Once done, we will submit the plan to PLN for
approval before passing the necessary documents to the energy ministry and
going back to PLN to sign the contract," he added. The entire planning to
securing approval process is expected to take at least a year.

For now, Bina Puri's construction division remains its main revenue
contributor, though its power division's profit margin is in the
double-digit region, versus the construction business' slim single digits.

"The power sector's current contribution to the overall group revenue may
not be very high but in terms of bottom line, it is much better than the
construction. Profit margins for the power and construction segments are
about 15% and 1% respectively," Tee said.

"The energy business is profitable because the rates are good, especially
for hydroelectricity. For example, we sell hydropower [to PLN] for 10 US
cents (43 sen) per kWH - compared to Malaysia which is selling for about
five to six sen - and diesel for about one US cent," Kang said.

Meanwhile, though Tee said the group is operating in a tough business
environment, Bina Puri's outlook on the industries it is in still "looks
good".

"For the construction business, a lot of projects under the11th Malaysia
Plan will be rolled out and the ministries are expected to be calling for
tenders accordingly," Tee said.

Bina Puri has an outstanding order book of RM2.2 billion, mostly from
infrastructure and building projects, whereas its tender book is valued at
over RM10 billion.

"There are no plans to expand outside Malaysia now. We have a small presence
in Thailand but extending further regionally will be done on a case-by-case
basis," Tee added.

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Link to Original Article:
http://www.theedgemarkets.com/article/bina-puri-unit-makes-strong-debut-idx

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com