Reservoir Link expects more revenue from RE
KUALA LUMPUR: Reservoir Link Energy Bhd expects renewable energy segment (RE) to contribute at least 60 per cent to its revenue from this year as the company diversifies into green energy following its acquisition of Founder Energy Sdn Bhd.
Reservoir Link, which started as a provider of oil and gas (O&G) upstream services, decided to participate in the transition towards RE as it planned to move forward as an energy player.
Executive director Thien Chiet Chai said the company was focused on working towards sustainability whereby the acquisition of Founder Energy would help spearhead into the construction and development of solar farms before it ventured into other RE-related projects.
“I believe RE’s contribution from this year will be at least 60 per cent. For RE business, the revenue is big but its margin is thinner compared to O&G. Revenue wise, 60 per cent would come from RE while the rest would be from the O&G segment,” he said in a recent interview with New Straits Times.
For its first quarter (Q1) ended March 31, 2022, Reservoir Link registered a net loss of RM3.11 million on the back of lower revenue at RM6.48 million versus RM11.88 million in Q1 2021.
Chief financial officer Bong Leong Sung said the earnings were dragged down by the completion of the Mauritania project in October last year.
This decline was also attributable to the slowdown in its O&G segment due to the monsoon season that occurred.
“We expect strong contributions from RE for Q3 and Q4, barring any unforeseen circumstances. We know the US market is crashing at the moment but these are the things we cannot predict.
“Our O&G segment is also expected to pick up pace in upcoming quarters to contribute to better overall earnings,” said Bong.
Seeking RE opportunities with Founder Energy
In August last year, Reservoir Link received its shareholders’ approval to acquire a 51 per cent stake in Founder Energy for RM21.2 million.
Founder Energy specialises in implementation of solar photovoltaic (PV) projects for large scale solar (LSS), commercial, industrial and residential.
Prior to the acquisition exercise, Founder Energy was known as Solar Bina Engineering Sdn Bhd.
Thien said Reservoir Link had participated in tendering for the main contractor package with three major companies on LSS4.
Currently, discussions are in the final stages and announcement will be made once the projects are secured.
He noted that the company was in the midst of several ongoing project bidding in Malaysia which totalled to nearly 40 megawatt (MW).
It anticipates the projects to be awarded within the third quarter (Q3) or Q4 while construction work will only begin in Q1 next year.
Reservoir Link is riding on the positive momentum with the reopening of international borders and resumption of economic activities.
Thien said the company was seeking for opportunities outside of Malaysia and its first market to tap post-pandemic was Indonesia.
“In Indonesia we are looking at another 10 to 12 MW worth of hydropower projects. Even before the pandemic we had plans to expand in Indonesia and the borders are open now so we are actively going out.
“We are aggressively making our way there. It is a huge market so we will look at the O&G as well as RE opportunities there,” he said.
On its overseas activities with regards to RE, Founder Energy chief executive officer Eric Lee said the company had recently incorporated a subsidiary in Singapore known as Founder Energy (Singapore) Pte. Ltd.
“We will begin some work in Singapore mostly on the rooftop and we have tendered some projects as well.
“The works are targeted to begin in either Q3 or Q4,” he said.
Reservoir Link recently completed the transfer to list on the Main Market of Bursa Malaysia after adhering to all the listing criteria and received relevant approvals.
The company is now known as one of Malaysia’s largest solar engineering, construction and commissioning contractors as it shifts to the solar renewables front.
“As part of our efforts to make renewables more viable we have also explored the possibility of delivering energy storage solutions. We are now ready for the next phase of our exciting journey following the elevation of our listing status paired with bright prospects from our business segments which reflect the demand for both the O&G and renewables in Malaysia,” said Thien in a statement.
NST
