Electrical substation and transmission lines contractor Pestech (Cambodia) Plc posted a net loss of $1.3 million in its first quarter ended Sept 30, 2022 for the financial year ending June 30, 2023 (1QFY23) compared to $1.1 million net profit a year ago.
Loss before tax of $1.2 million for the period was mainly attributable to higher finance costs, its filing with Cambodia Securities Exchange (CSX) on Monday showed.
Revenue tumbled more than half to around $8 million in 1Q23 from $18.2 million in the corresponding period in FY22 reflecting the changes in the execution progress of its projects in Cambodia.
Accordingly, the drop in revenue was mostly due to the completion of the 20 megawatt solar farm construction in Bavet in January 2022 and the progress of the East Siem Reap transmission line project, which is moving to the tail end of the project cycle.
Its engineering, procurement, construction and commissioning contract for electrical transmission and substation amounting to 29.4 trillion riel (about $7 million) is the main contributor to the revenue in 1QFY23, constituting 89.7 percent of the total revenue. Operation and maintenance activities propped the remaining revenue.
Incorporated in Cambodia in 2010, Pestech Cambodia is a wholly-owned subsidiary of Kuala Lumpur-listed Pestech International Berhad. It was listed on CSX’s Mainboard at the height of the Covid-19 pandemic on August 12, 2020.
In a statement, Pestech Cambodia executive chairman Paul Lim Pay Chuan said the company experienced “unfavourable market sentiments” in the first quarter of its current fiscal year which extended from FY22.
“The negative impacts arising from the Russian-Ukraine conflict, repetitive interest rate hikes, and the prolonged locked down situation in China, did not subside in 1QFY23."
“We experienced headwinds in logistic arrangement, supply chain management, irrational movement of prices in goods and materials and rising cost of financing,” he said.
However, he is hopeful that the current “undesirable” market conditions are temporary, and remained focused on its vision to become a “Cambodian homegrown power infrastructure company serving the greater Mekong region”.
Meanwhile, CEO Han Fatt Juan said the company continued to be “plagued with higher operational expenses”, which shrunk its operational profit margin to about 7.5 percent.
“That, coupled with higher financing costs, caused the bottomline to register a deficit of about $1.3m in the first quarter of this fiscal year,” he said.
The 1QFY23 was mainly supported by the progress of the 500kV transmission line from Phnom Penh to the Cambodia-Laos border project together with a Japan International Corp Agency-funded 230kV underground cable project.
“The operation and maintenance team brought about a base turnover that helped buoy the company,” he said.
The company also installed a 750kWp grid-tier rooftop photovoltaic power generation system for a factory in Kandal together with French entity TotalEnergies SE.
“We intend to continue expanding the provision of reliable solutions for grid-tier rooftop solar to industrial customers in Cambodia,” Han said.
Noting that provision is in line with their plan to promote sustainable power development, he added that it is being done in accordance with Cambodia's effort to actively integrate renewable energy resources into its energy mix.
Han also shared that Pestech Cambodia participated in 220kW and 500kV transmission line tenders in Uzbekistan, with the hope of debuting in Central Asia via the export of Cambodian power infrastructure development services.
“Backed by such a new prospect, with an ample order book in hand, the management maintains a positive view on the future performance of the company,” he said.
On Monday, the counter closed up 20 riel at 3,130 riel for a market capitalisation of $56.6 million.