|Kim Heng Ltd ($0.107, up 0.2 cent) announced that it has completed the purchase of a 1250 tonnes Sany Crawler Crane for a total consideration of approximately S$10 million.
The crane is targeted to provide lifting and installation ofwind turbines and to enable the Group to offer turnkey lifting and installation works for onshore and offshore renewable windfarm projects in both Taiwan and Vietnam.
This acquisition allows the Group to keep up with the technical capabilities and requirements in the rapid increase in size and height of windfarm turbines installation.
Of the approximate S$10 million required for the purchase of the 1250 tonnes crawler crane, about S$7.5 million shall be funded by a green loan granted by United Overseas Bank and the balance were funded by the Group’s internal resources.
In addition, the Board wishes to announce that Kim Heng Heavy Equipment Pte Ltd, a wholly-owned indirect subsidiary of the Company, has entered into a turnkey lifting & installation contract with an established windfarm contractor to provide the Services on the terms and conditions ofthe Contract.
Following the purchase of the 1250 tonnes Sany Crawler Crane, it will be deployed for the purpose of the Contract.
The entry into the Contract is an additional step taken by the Company to expand into the renewable offshore wind energy construction business in Vietnam and expand its value chain ofservices to provide lifting and installation of wind turbine nacelles, blades and transition pieces.
The initial term ofthe Project is a firm 30 months commencing on 12 November 2021, being the date on which the Crane is assembled at the physical location where the Services are to be performed, which is intended to be at South Vietnam onshore windfarm and the aggregate contract price for the Contract and provision ofServices for the Project Duration is US$7.2 million including all costs and charges relating to the Contractor’s fulfi llment of its obligations under the Contract but exclusive ofvalue added tax, with the monthly project milestone being US$0.24 million.
The Contract Price shall be fixed and not subject to any escalation or exchange rate fluctuation for any reason during the Project Duration.
Through the entry into the Contract, the Group is one step closer to providing turnkey windfarm construction and installation services, expanding from its current capabilities of installing transmission cables for windfarms in Taiwan.
The Group continues to take active steps to diversify its business into the renewable energy sector by expanding its heavy lift services to provide lifting and installation of the wind turbine nacelles housing the generator and gearbox, wind turbine blades and wind turbine transition pieces.
Kim Heng is capitalized at $76 million and 1.5x P/B ratio and does not have a meaningful PE given its loss position. There are currently no brokers covering this counter.