BM GreenTech gets investors’ attention as it morphs into a clean energy player

BM GreenTech Bhd is having an amazing ride as its share price more than doubled in the past year. The counter shifted to high gear after touching a low of 86 sen in January to jump to a year high of RM2.15 in July. However the the biomass boiler manufacturer lost some ground to RM1.60 in August before rising to RM1.82 on Sept 19.

The company is currently trading at a price earnings ratio of 27x and price over neat asset value ratio of 3.4x are higher than most peers. This P/NAV ratio is currently at its highest level in recent years.

The company had been consistently profitable in the past 5 financial years. Net profit decreased from RM23.3 million in the financial year ended Mar 2020 to RM14.1mil in FY23.

However, net profit rebounded to a high of RM33.6 million in FY24 driven by higher revenue and improved margin. In the recent three quarters, the company’s results had been inconsistent.

But things could turn for the better as it is looking to acquire a solar firm that will guarantee a minimum of RM44 million in accumulated profit over the next four years.

BM GreenTech has proposed to fully acquire solar firm Plus Xnergy Holding Sdn Bhd for RM110 million in shares, as it seeks to become the region’s preferred partner for clean energy and water solutions. The proposed acquisition will be settled through issuance of 81.48 million new shares at RM1.35 apiece.

BM Greentech will concurrently undertake a special issuance of new shares at the same price as the issue price of RM1.35 to its parent company, QL Green Resources Sdn Bhd, a subsidiary of QL Resources Bhd. As at June 30, 2023, QL had a 52.6% stake in BM Greentech. BM Greentech said the proceeds raised from the special proposed special issuance will be used for its business expansion into the clean energy sector.

Plus Xnergy is a provider of clean energy solutions for commercial, industrial, residential and large-scale solar (LSS) projects including solar farms, and has a nationwide presence in Malaysia. It has over 400 MWp of installed solar photovoltaic capacity, generating 2,000 GWh of clean energy as of March 2024.

Plus Xnergy’s focus on energy generation, efficiency, storage, and electric vehicle charging complements BM Greentech’s existing bioenergy, water treatment, and solar energy solutions.

It will be interesting if BM Greentech can indeed morph itself into a clean energy sector and contribute to its future growth.