PETALING JAYA: Ink manufacturer Toyoink Group Bhd has been given the green light by the Vietnamese government to conduct research and development (R&D) on a proposed US$2.5 billion (RM7.8 billion) thermal power plant project in the country.
Named the Song Hau 2 thermo power plant, it is slated to have a capacity of 2x1000 MW and will be located at the Song Hau power centre in Hau Giang province.
Toyoink added that the Vietnamese Ministry of Trade and Industry and the province’s People’s Committee will provide guidance to set up the investment project, to implement steps and to organise assessment and submission for approval as required by law.
The group said it will negotiate on power purchase agreements (PPA) and implementation pacts with the authorities, and is looking for partners to incorporate a joint-venture company in Vietnam.
Industry observers have been pessimistic on Toyoink undertaking the massive project, largely due to the company’s weak balance sheet and its lack of expertise in the power generation business.
“Although it is understood that Toyoink will not be venturing into the (power generation) business alone, given the scale of the project, there has to be more information made available and many issues to be clarified. It will be interesting to see how funding is secured,” said an industry observer.
As at Sept 30, the group was in a net debt position of RM10 million. During the period, it had RM106.78 million in current assets, with RM104 million of the amount tied up in inventories and trade receivables.
Its cash and bank balances stood at RM1.78 million, which were low as the group had RM41.3 million in short-term borrowings and amounts owed to directors and trade payables. For 2Q ended Sept 30, Toyoink raked in RM435,000 in net profits compared with RM1.4 million in the corresponding quarter last year.
Trading in Toyoink’s securities was suspended yesterday, pending the announcement. Trading will resume today.
The share price has increased by 36.23% this month, ending Tuesday at RM1.88, gaining 50 sen from its close of RM1.38 on Nov 30.
This article appeared in The Edge Financial Daily, December 8, 2011.
Named the Song Hau 2 thermo power plant, it is slated to have a capacity of 2x1000 MW and will be located at the Song Hau power centre in Hau Giang province.
Toyoink added that the Vietnamese Ministry of Trade and Industry and the province’s People’s Committee will provide guidance to set up the investment project, to implement steps and to organise assessment and submission for approval as required by law.
The group said it will negotiate on power purchase agreements (PPA) and implementation pacts with the authorities, and is looking for partners to incorporate a joint-venture company in Vietnam.
Industry observers have been pessimistic on Toyoink undertaking the massive project, largely due to the company’s weak balance sheet and its lack of expertise in the power generation business.
“Although it is understood that Toyoink will not be venturing into the (power generation) business alone, given the scale of the project, there has to be more information made available and many issues to be clarified. It will be interesting to see how funding is secured,” said an industry observer.
As at Sept 30, the group was in a net debt position of RM10 million. During the period, it had RM106.78 million in current assets, with RM104 million of the amount tied up in inventories and trade receivables.
Its cash and bank balances stood at RM1.78 million, which were low as the group had RM41.3 million in short-term borrowings and amounts owed to directors and trade payables. For 2Q ended Sept 30, Toyoink raked in RM435,000 in net profits compared with RM1.4 million in the corresponding quarter last year.
Trading in Toyoink’s securities was suspended yesterday, pending the announcement. Trading will resume today.
The share price has increased by 36.23% this month, ending Tuesday at RM1.88, gaining 50 sen from its close of RM1.38 on Nov 30.
This article appeared in The Edge Financial Daily, December 8, 2011.
