KPower rises as Abdul Karim gives up board role

by PRIYA VASU / pic by TMR FILE

KPOWER Bhd rose as much 19.5% or eight sen to 49 sen yesterday following the resignation of Datuk Dr Mohd Abdul Karim Abdullah (picture) as its non-independent non-executive chairman which came a day before the company’s AGM yesterday.

KPower’s stock price hit a high of 56 sen in intraday trade but profit taking saw it settles lower amid a jump in trading volumes as investors saw the move as putting some distance between KPower and issues at Serba Dinamik Holdings Bhd and Sarawak Consolidated Industries Bhd (SCIB).

“The move by Abdul Karim could signal a new strategy. He might want to focus on the issues at SCIB and Serba Dinamik which remain suspended. KPower frankly has been caught up in the storm due to association with him,” said an analyst with a local brokerage.

He added that the sharp price spike in KPower share could see a quick retracement if there is no sustained buying interest from investors.

KPower’s deputy chairman Mustakim Mat Nun will assume the chairman’s position temporarily, the company noted in its statement yesterday.

Abdul Karim and Grand Deal Vision Sdn Bhd emerged as KPower’s majority shareholders in 2019, and he and the new management team successfully transformed KPower from a loss-making manufacturing business into a renewable energy (RE) based concern and diversify further into the healthcare and logistics business segments.

KPower, in its statement, noted that it remains committed to reinforce footing in the RE segment by establishing itself as a one-stop centre for RE solutions, serving the entire RE spectrum, including waste-to-energy and wind energy.

Abdul Karim is the second largest shareholder in KPower with a 15.23% stake or 82.65 million shares.

Other major shareholders are Kenanga Investors Bhd with a 16.3% stake and Grand Deal Vision holding 8.52% stake.

Mustakim holds some 34.4 million shares or 6.33% in KPower.

Abdul Karim related stocks continues to draw investors’ attention on face-off with regulators and ongoing legal lawsuits against Bursa Malaysia Securities Bhd, Ernst & Young Consulting Sdn Bhd and KPMG Ltd following the flagging of RM4.54 billion in transactions in Serba Dinamik by KPMG.

Abdul Karim is the founder, and group MD and CEO of Serba Dinamik.

Shares of Serba Dinamik remain suspended since Oct 22 on failure to file earnings report and findings from the special audit undertaken to Bursa Malaysia.

Shares of SCIB, in which Abdul Karim holds a chairman post and is a major shareholder, have been suspended since Nov 9 after it failed to submit its annual report with the time period.

KPower’s stock is still very much trading below its target price of RM1.28 as assigned by research outfit Rakuten Trade Sdn Bhd.

At present, KPower’s outstanding orderbook stands at RM1.9 billion which provides earnings visibility for the next two to three years.

The company is actively exploring new business opportunities through mergers and acquisitions to boost its business prospects.

Rakuten noted that KPower’s balance sheet remains healthy with net cash of RM45 million as at June 30, 2021. The company has a dividend policy of paying out 20% of its earnings.

“Based on our estimates, Kpower is expected to pay two sen and 2.2 sen for FY6/22 and FY6/23 respectively, translating into a yield of 3.2% and 3.5%, respectively. Our ‘Buy’ call is premised on (its strong earnings visibility and growth potential underpinned by its RM1.9 billion outstanding orderbook, income contribution from 50-megawatt (MW) solar photovoltaic (PV) energy generating facility beginning 2024 and decent dividend yield,” the Rakuten report stated.

In September 2020, KPower in collaboration with Pahang Development Corp (PKNP) participated and submitted a bid for a 50MW solar PV energy generating plant sited in Pekan, Pahang.

KPower’s 95% owned subsidiary, PKNP KPower Suria Sdn Bhd had on Aug 19 signed the large-scale solar PV power purchase agreement with Tenaga Nasional Bhd.

“The plant will begin contributing in 2024 with free cashflow (FCF) of RM2 million per year for the first 15 years (after repayment of sukuk). Thereafter, from year 16-21, FCF will increase to RM12 million per year,” the online broker stated.