Ekarat says sales to double on solar units

Ekarat says sales to double on solar units

Solar business to jump nearly 600% in 2008

ARANEE JAIIMSIN

Ekarat Engineering Plc, a SET-listed transformer and power substation manufacturer, forecasts sales to double to four billion baht mainly driven by its wholly owned solar power subsidiary Ekarat Solar, chief executive Kietpong Noichaiboon said yesterday.

Ekarat, the country's sole power transformer maker, anticipated the solar cell and module business to grow by 567% to two billion baht from about 300 million.

Revenue from the company's core business, transformers and power substations, is expected to grow by 17.7% to two billion baht in 2008 from 1.7 billion last year, said Mr Kietphong.

The growth will fuelled by a better investment climate, resulting in higher demand for transformer products. Ekarat Engineering has a backlog worth 500 million baht in hand, which it will realise this year. As a result, it aims to post consolidated sales revenue of four billion baht in 2008. In he first nine months of 2007, Ekarat earned a net profit of 47.25 million baht, down from 99.32 million a year earlier.

The solar power business has been emerging since last year as all types of alternative fuels have become more popular as oil prices began to soar.

The government's numerous support programmes for renewable fuel also serve as a key growth engine. Ekarat Solar has fully utilised its production capacity for solar modules, which stands at 10 megawatts per year.

The company yesterday signed a 1.1-billion-baht contract with Nexis s.r.l Co of Italy to supply 8.2 megawatts of solar modules to its Italian business partners. It also has a 300-million-baht order for 1.8 megawatts in solar products from Swiss-based HB-Tech.

''Global clean energy has been expanding by 40% over the past five consecutive years and its tendency is to continue in the future,'' said Mr Kietphong.

The company is now discussing business deals with prospective clients in Korea, Spain and France. It aims to finalise them in the second quarter.

Ekarat Solar hoped to expand its full solar cell production capacity to 30 megawatts per year in 2009, which will require only 20 million baht to upgrade existing machinery, said Mr Kietphong.

The company also may double its solar module capacity to 20 MW per year to cope with rising demand in the global market. The expansion would require an investment of between 200 million to 300 million baht.

Ekarat Solar would raise its registered capital to 900 million baht at the end of this month from 500 million baht through a private placement in an effort to cut its financial burden in half.

It plans to offer new shares to funds and strategic partners such as Nexis. The price would be between 1.50 and two baht a share with a par value of one baht each.

After the fund-raising, Ekarat Engineering's stake in Ekarat Solar would drop to 51%, said Mr Kietphong.

Ekarat Solar has liabilities of one billion baht with an interest burden of 80 million baht a year. Mr Kietphong said new capital could help cut its interest burden in half to 40 million baht.

Furthermore, Ekarat Solar plans to list on the Market for Alternative Investment (MAI) next year, when it expected net profit to hit 10 million baht.

Shares of Ekarat (AKR) closed on Friday at 2.18 baht, down eight satang, in trade worth 28.4 million baht.