BM Greentech's Expansion in Local Solar Ecosystems
Developments
- **Acquisition agreement: ** BM Greentech Bhd (BMG) and solar company Plus Xnergy Holdings Sdn Bhd (PXH) have formally signed a conditional share acquisition agreement (SAA) to meet BMG's proposed 0.11 billion acquisition of Plus Xnergy Holdings on June 18, 2024.
- **Acquisition details: ** The acquisition includes 66.6 million common shares representing 100% of PXH's shares, which will distribute 81.5 million new BMG shares at an issue price of MYR 1.35 per share.
- **Dividend issuance: ** BMG is also proposing to issue a dividend of up to 0.172 billion warrants on a one-to-four ratio after completing the acquisition.
Our point of view
- **Adding renewable energy solutions: ** The acquisition demonstrates the Group's long-term commitment to becoming a partner for innovative and cost-effective green energy solutions in the region. Expanding its solar business beyond rooftop solar will provide BMG with a broader revenue stream and provide customers with electricity and heat through partnerships with grid companies.
- **PXH is a good match for BMG's solar business: ** PXH is a leading Malaysian solar company with 6 solar farms and collaborative projects with SMEs and enterprises to support their ESG goals. PXH's clean energy ecosystem encompasses power generation, energy storage, energy efficiency, and electric vehicle charging solutions. With the acquisition of PXH, BMG will be able to expand the breadth and depth of its clean energy solutions.
- **Strengthening market position: ** We see this acquisition as an excellent opportunity for BMG to enhance its products and expand its revenue stream. The combined capabilities of PXH and BMG will enable the Group to seize large-scale solar projects to meet growing demand for clean energy. By integrating operations and sharing resources, we believe BMG can achieve cost savings and positively impact its profitability. The acquisition also has the potential to push BMG to the forefront of Malaysian solar energy initiatives, in line with the Malaysian Solar Industry Roadmap (SIR2030), National Energy Transition Roadmap (NETR), and Renewable Energy Roadmap (myRER).
- **Future outlook: ** We believe this expansion will benefit BM Greentech Bhd's solar division (not rated).
- **Acquisition agreement: ** BM Greentech Bhd (BMG) and solar company Plus Xnergy Holdings Sdn Bhd (PXH) have formally signed a conditional share acquisition agreement (SAA) to meet BMG's proposed 0.11 billion acquisition of Plus Xnergy Holdings on June 18, 2024.
- **Acquisition details: ** The acquisition includes 66.6 million common shares representing 100% of PXH's shares, which will distribute 81.5 million new BMG shares at an issue price of MYR 1.35 per share.
- **Dividend issuance: ** BMG is also proposing to issue a dividend of up to 0.172 billion warrants on a one-to-four ratio after completing the acquisition.
Our point of view
- **Adding renewable energy solutions: ** The acquisition demonstrates the Group's long-term commitment to becoming a partner for innovative and cost-effective green energy solutions in the region. Expanding its solar business beyond rooftop solar will provide BMG with a broader revenue stream and provide customers with electricity and heat through partnerships with grid companies.
- **PXH is a good match for BMG's solar business: ** PXH is a leading Malaysian solar company with 6 solar farms and collaborative projects with SMEs and enterprises to support their ESG goals. PXH's clean energy ecosystem encompasses power generation, energy storage, energy efficiency, and electric vehicle charging solutions. With the acquisition of PXH, BMG will be able to expand the breadth and depth of its clean energy solutions.
- **Strengthening market position: ** We see this acquisition as an excellent opportunity for BMG to enhance its products and expand its revenue stream. The combined capabilities of PXH and BMG will enable the Group to seize large-scale solar projects to meet growing demand for clean energy. By integrating operations and sharing resources, we believe BMG can achieve cost savings and positively impact its profitability. The acquisition also has the potential to push BMG to the forefront of Malaysian solar energy initiatives, in line with the Malaysian Solar Industry Roadmap (SIR2030), National Energy Transition Roadmap (NETR), and Renewable Energy Roadmap (myRER).
- **Future outlook: ** We believe this expansion will benefit BM Greentech Bhd's solar division (not rated).
BMG is listed on Bursa Malaysia and operates in the industrial sector, contributing to both plantations and the commercial sector. BMG's main business is the design, manufacture, construction and maintenance of biomass boilers.
BMG has been expanding its solar business to provide customers with more renewable energy solutions. The acquisition of PXH will be a major step in adding more value to its solar sector and streamlining its revenue over the next few years.
We also believe that this acquisition, along with the 90.3 million new shares to be issued, will improve the future financial performance of QL Resources (purchase, target price: MYR 9.75). QL Resources holds 52.57% of BMG's shares.
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