RE-energised with green projects
WITH a growing demand for renewable energy and Malaysia’s ambitious net-zero emissions target by 2050, engineering solutions provider Kawan Renergy Bhd has some reason to see a brighter future.
Its tender book has already risen to over RM1bil, helping the group achieve its aim of sustainable profitability and long-term growth.
Managing director Lim Thou Lai says the jobs that the company has tendered for comprise primarily of clean energy projects and renewable energy-related jobs.
“Additionally, the current order book stands at RM100.3mil, comprising renewable energy and co-generation plant projects, industrial process equipment and industrial process plants,” Lim tells StarBiz 7.
He says that as of the first quarter of financial year ended Jan 31, 2025 (1Q25), the company’s net margin stood at 16.7%.
“Project net margins vary depending on the segment, as our projects are highly customised and tailored to client-specific requirements,” Lim says.
Historically, the company’s project net margin is above 10% depending on project complexity, scale, and scope, he adds.
Lim says Kawan Renergy has been actively collaborating with leading provider of energy solutions to strengthen its current and future project offerings.
“This allows us to deliver more comprehensive solutions, particularly in clean and renewable energy sectors which are our key focus areas as reflected in our tender book,” he says.
Lim says the company is now committed to delivering sustainable profitability and long-term growth to create “greater value” for its shareholders.
Rakuten Trade Sdn Bhd head of equity sales Vincent Lau, who has chosen Kawan Renergy as his top stock pick for 2025, notes that the company’s stock has fallen to a more “reasonable” price point from its 52-week high of RM1.04.
Its 52-week low is 44 sen.
The stock is currently trading at 59.5 sen per share, valuing the entire company at over RM300mil.
Growing tender book
“For the financial year ending Oct 31, 2025 (FY25), Kawan Renergy’s key growth driver will be the tender book, with a sizeable portion of this in the higher- margin renewable energy space,” says Lau.
He also says the company has co-generation expertise, allowing it to tap into opportunities within the data centre space.
Earnings-wise, Lau points out that the company reported an all-time high profit in FY24 as net profit had surged 44.5% to RM19.2mil compared with RM13.3mil in FY23.
“Its current order book plus its solid tender book will provide earnings visibility for at least the next few years,” Lau says.
He adds that the growing demand for renewable energy and co-generation plants – which is in line with Malaysia’s 2050 net-zero emissions target – will continue to be a growing catalyst for the company.
Kawan Renergy operates via three main subsidiaries, namely Kawan Engineering Sdn Bhd, Kawan Green Energy Sdn Bhd and Magenko Renewables (Asia) Sdn Bhd.
One of the company’s more recent contracts was a RM58mil contract from Kinergy Advancement Bhd’s key sustainable energy solutions entity, KAB Energy Holdings Sdn Bhd.
The project covers the scope of engineering, procurement, construction and commissioning or EPCC, for a 52MW power plant and its associated facilities in Sipitang, Sabah, with an estimated completion by the first quarter of 2026.
Kawan Renergy was listed in May last year on the ACE Market of Bursa Malaysia following an initial public offering exercise that raised RM33mil.
Of the funds raised, the company said RM15mil would be used as working capital for on-going and future co-generation plant projects, RM5mil for investment in a new two megawatt biomass power plant, RM2.5mil to improve the output of its Bercham plant and the remaining for the purchase of additional machinery and repayment of bank borrowings and estimated listing expenses.
For 1Q25, it reported a 17.3% year-on-year increase in net profit to RM4.93mil from RM4.2mil a year earlier, driven largely by higher margins at its industrial process plants.
Revenue for the period stood at RM29.3mil against RM19.9mil a year ago. No dividend was declared for the quarter.
In its latest annual report, Kawan Renergy told shareholders that in FY24, a total of RM10mil in dividends was paid out, an increase from RM5mil in FY23.
“This reflects the company’s strong financial position and its commitment to providing more regular returns to shareholders.”
The company also said in the report that it is actively expanding its renewable energy segment and plans to look for opportunities in the biomass space.
“These projects involve using the vast amount of biowaste generated by the agricultural sector. These initiatives aim to diversify income streams and increase recurring revenues.”
Kawan Renergy says sustainability is a core aspect of the company’s operations, anchored by a strong governance structure that drives the achievement of its sustainability objectives
The company also says it recognises the “inherent challenges and risks” within the industry and will proactively identify and mitigate these risks.