KNM plans to have a recurring income stream
> Group wants to cut dependence on one-off contracts
KUALA LUMPUR: Process equipment manufacturing, engineering and construction group KNM Group Bhd aims to derive at least 30% of its income from recurring jobs by 2019.
The target is part of a five-year plan, which starts in 2017, to increase its recurring income stream to 70% of total income.
KNM group finance director Terence Tan said currently all its income is from one-off contracts.
“Our long-term strategy for KNM is to develop a sustainable recurring income stream. In five years, we want 70% of our income derived from a recurring stream,” he told a press conference after KNM’s signing ceremony for financing facilities of up to RM689.9 million yesterday.
Tan said 2017 will be the first year the group sees a recurring income stream from its bioethanol project in Thailand.
The first phase of 72%-owned subsidiary Impress Ethanol Co Ltd’s (IEL) bioethanol plant has a production capacity of 200,000 litres ethanol a day.
Tan said after the issuance of its Thai bonds by year-end, it will kickstart the second phase of the bioethanol plant, which will boost its production capacity by 200,000 litres ethanol a day. “We’re not looking at just the recurring income in Thailand, we also have the Peterborough project in London, which is another recurring income stream but it will only come onstream after 2018.”
KNM group CEO Lee Swee Eng said it is targeting for transformation into having more recurring income instead of being a purely contracts player.
“We’re there to stay in Thailand. We’re also looking at other opportunities on renewable energy in Thailand and wasteto-energy projects within the next five years,” added Lee.
Earlier, at the signing ceremony, KNM sealed deals for bonds of up to 2.78 billion baht (RM329.9 million) guaranteed and issued by Credit Guarantee and Investment Facility (CGIF) (Thai bonds) and RM360 million more financing facilities from Danajamin Nasional Bhd and Affin Islamic Bank Bhd.
KNM will use proceeds from the Thai bonds to support IEL’s bioethanol plant in Thailand. KNM is the first Malaysian company to obtain a credit guarantee from CGIF for its bond to be launched in Thailand, and the first Malaysian-listed company to issue baht-denominated bonds in the Thai capital market.
CGIF was established by the 10 members of the Association of Southeast Asian Nations (Asean) together with China, Japan, South Korea (Asean+3) and the Asian Development Bank (ADB) to help companies that otherwise would have difficulty tapping local bond markets to secure longer-term financing, reduce their dependency on short-term foreign currency borrowing to mitigate currency and maturity mismatches.
Meanwhile, the Islamic guarantee facility of up to RM200 million from Danajamin for a proposed capital market instrument and blanket working capital facilities of up to RM160 million from Affin Islamic are for contracts relating to the Refinery and Petrochemical Integrated Development project in Pengerang, Johor.
Lee (seated second from left) at the signing ceremony yesterday. Also present are (seated from left) CGIF vice-president of operations Khoo Boo Hock, Danajamin Nasional Bhd chief corporate and investment officer Mohd Amri Mohd Sofian, Affin Bank Bhd head of corporate and commercial banking Prabhakaran GK and Affin Hwang Investment Bank Bhd senior director and head of client coverage Lai Sin Kee.