Monday, August 11, 2014

Integrax - agreement for Manjung 5 from Tenaga

A port operator will benefit from Tenaga’s 1000MW Manjung 4 power plant in Manjung, Perak, commencing operations in Aug 2014. Another catalyst will be the possibility of Integrax inking an agreement for the Manjung 5 power plant, which is slated for completion in Oct 2017.

While the terms for the supply of coal to Manjung 4 was concluded in July 2012 and will last until March 2040, Integarx is now said to be finalizing the details of the supply agreement with Tenaga for Manjung 5. Considering Tenaga is a 22.1% stake of Integrax.

Integarx should get the supply agreement for Manjung 5….

The new plant Manjung 4 should translate into better earnings for Integarx, considering that the feedstock for the Manjung power plants is coal.

Integarx handles the offloading of Tenaga’s coal shipments.

However while the earnings from Manjung 4 will positively impact the port operator’s bottom line, it will only buffer the loss of earnings from the expiration of a fixed facility payment arrangement, as per the Jetty Terminal Usage Agreement 1 signed in 1999 with Tenaga.

The real growth for Integrax will only kick in after Manjung 5.

As at March 2014 the port operator had cash and bank balances of rm179 million. It had short term debt amounting to rm18.1 million and long term borrowings of rm4.1 million.

Other than Tenaga, substantial shareholders are Amin Halim Rasip with a 21.4% stake and Perak Corp Bhd largely controlled by Perbadanan Kemajuan Negeri Perak with 15.7% stake.

Another shareholder is Lim Kheng Yew has close to 4% stake.

The top 12 or so shareholders have about 80% of the company’s 300 million share base …

For one, Integrax has only one major client … Tenaga.

While Integrax has held talks with mining giant Vale for the latter to use its port facilities, the negotiations seem to have made little headway. Vale is building an iron ore distribution hub in Teluk Rubiah, Perak right next door to Integrax’s 80% owned Lekir Bukl Terminal Sdn Bhd.

However, up unitl now Vale has not come with any plans to use Integrax’s facilities, opting instead to use a specific purpose jetty on its own land.

Integrax is also torn between catering to Tenaga’s whims and fancies, and the Perak state’s aspirations.

The Perak state government wants Integrax to be more than just a coal terminal for Tenaga while Tenaga wants Integrax to merely serve Tenaga as coal terminal.

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