Boilermech eyes IPPs as new area of growth

Boilermech Holdings Bhd has set its sights on IPPs as its new area of growth.

Although the company already has IPPs as its clients, Boilermech executive director Chia Lik Khai said it is looking to expand its product offering beyond selling just the boiler to the market segment.

"We have been providing some of these boiler systems piecemeal, but I think the approach now has to be more integrated"

He said Boilermech is in talks with IPPs in other countries in the region that supply power using renewable energy. It already has a few customers on board thus far on this integrated concept.

"We work more solution-based, serving customers' energy requirements, be it to maximise energy power generation or fuel cost savings"

Boilermech is still focused on the palm oil industry, which contributes more than 90% of the company's revenue.

With exports taking up half of its revenue portion, Boilermech is looking to expand its penetration within Malaysia and Indonesia; and geographical reach to other markets like the Philippines, Thailand, Central and South America, and Africa.

"We are also looking at how to increase our service and repair contribution to serve our existing customer base better, and to increase some revenue from there"

It looks to doubling the contribution to revenue from service and maintenance from just 5% currently over the next 3 years.

Moving forward, Boilermech is looking at widening its services to the palm oil industry, which is looking at more efficient and environment friendly ways to manage fuel.

"We believe the palm oil industry has the opportunity to develop a lot more potential in renewable energy generation [biomass and biogas power], and in solving environmental problems of solid waste"

Chia said the company's strategy is to bring more green technology into the palm oil milling industry to improve efficiencies and reduce environmental footprints. He noted that 3R's of reduce, reuse and recycle.

On that note, the company is looking at expanding clean energy and at new technology solutions that can ensure the sustainability of the palm oil industry in the longer term.

It is also looking to expand its coverage to other agricultural and resource-based industries.

Since 2005, Boilermech has been involved in the design, manufacture, installation and commissioning of biomass boilers. It also provides boiler repair and refurbishment services.

On average, Boilermech manufactures 8 boilers per month with a 25-tonne per hour capacity. In the next phase of growth, it looks to produce 12 boilers per month. The boilers have a lifespan of up to 25 years.

Boilermech targets a 20% growth for its revenue yoy and at least a 15% growth for its PBT.

With a current order book of RM360m, which could last the company for 1.5 years based o its current financial year's annualised revenue of RM213m, this garners the company about 60% of local market share, according to Leong.

The Edge Financial Daily, 2 December 2013