NRA Capital Pte Ltd

Written by: Jacky Lee

Friday 6 Feb 2015

TEE International – press release

TEE International expands into the energy business and makes maiden foray into the Philippines

No impact to our forecasts for the times being. Maintain forecast and fair value of S$0.35.

TEE International Limited announced to expand into the energy business and makes maiden foray into the Philippines to invest and construct a 25 Megawatt (MW) green-field power plant and to supply electricity.

In connection with this, TEE has entered into a Subscription Agreement to subscribe to a 21.1% stake in PowerSource Philippines Distributed Power Holdings, Inc. (PHI) for a total cash consideration of 159.12m Philippine Peso (approximately S$4.9m), which will be funded through internal funds.

Development of Power Station

TEE has also entered into a Shareholder Agreement to infuse the necessary capital into PowerSource Philippines Energy, Incorporated, a special purpose corporation, held by PHI (95%) and Lafarge Iligan, Inc. (5%), for the construction of a 25 MW Circulating Fluidised Bed Combustor Boiler Coal and Biomass Fired Power Plant in the City of Iligan, Mindanao, Philippines.

Being located within the Lafarge cement plant, a power supply agreement has been signed with Lafarge, to supply electricity to its existing cement plant.

In addition, another power supply agreement was also signed with Iligan Light and Power Inc., which is the twelve largest private distribution utility in Philippines, to supply electricity to the City of Iligan, Mindanao. Collectively, the total off take of the two power sales agreements, will amount to 20 MW out of the 25 MW capacity.

One of the key partners in PHI include, Mr Aloysius B. Colayco, Country Chairman for the Jardine Matheson Group in the Philippines.

Our view:

This acquisition is in line with the group long-term strategy to growth its Infrastructure segment. Given the investment cost is relatively small and need approximately 3 years to build, we see no impact to our forecasts. Maintain forecasts and fair value of S$0.35. Maintain Overweight as we expects its engineering business will be picking up strong for the next two quarters.

We view this project risk is could be minimal given the strong background from one of its partners in this venture is Aloysius B. Colayco, who is also the country chairman for the Jardine Matheson Group in the Philippines. And its customer, Lafarge Philippines is part of the Lafarge Group, a world leader in building materials and a major player in cement, aggregates and concrete businesses. So far, the total off take of the two power sales agreements, will amount to 20 MW out of the 25 MW capacity.

 

Additional Company Specfic ReportsDate
TEE International – Press release
free
11 May 2015
TEE International – press release
free
6 February 2015
TEE International – Press release
free
7 August 2014


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