George Kent (M) Bhd anticipates water-related manufacturing and infrastructure operations driving the company’s future earnings as more projects are expected to come onstream in the country this year.
Its managing director Lee Pui Leng said the company expected the government to funnel more investments in water- and sewerage-related projects in the future after a long delay in implementing some of them in the past.
“We are looking forward to the brighter prospects for water-related projects as this will allow the company to expand and move to a higher level,” Lee told StarBiz during an interview.
He said two areas in the water- and sewerage-related projects that the company could be involved in were the water meter replacement market and some of the large infrastructure projects where it could form alliances in the mechanical and engineering works with consortia handling the projects.
George Kent is the country’s largest water meter manufacturer with more than 50% market share, according to Lee.
“In the new water meter market, demand has steadily increased by 4% to 6% while prospect in the medium term for the replacement market is strong with demand estimated at 250,000 to 300,000 units annually,” he said.
The government’s effort to improve the percentage of non-revenue water (NRW) had also given the company better prospect because it meant that water meters would have to be replaced every seven years, instead of 10 to 12 years in the past, Lee said.
He said George Kent at present produced a class “C” meter, which was proven and tested to be accurate and to last longer, compared with other lower grade imported meters.
“We have seen a substantial increase in the water meter replacement market, which now forms 50% of our business, compared with 20% in the past few years,” he said.
In water infrastructure projects, Lee named two main projects which the company hoped to be involved in.
They are the national sewerage project and the Pahang-Selangor raw water transfer project, whereby the company could seek alliance with the respective consortia, particularly in mechanical and engineering works.
“Our strong focus is on water projects and being a manufacturer, we stand a good chance to benefit from such projects,” he said.
According to Lee, George Kent has always seen itself as a pioneer in water resources projects as it had much earlier been involved in privatisation projects compared with others in the field.
Currently, the company is implementing the Rasa treatment plant stage 2 works of the Sungai Selangor water supply phase 3 project and central Kedah water supply project.
“We have also pioneered efforts by Malaysian companies abroad with our involvement in project such as the US$120mil water concession job in Port Moresby, Papua New Guinea,” he said.
Lee said, however, George Kent’s bold moves overseas were cut short by the economic crisis, which had landed the company into financial difficulties.
“We had completed our debt restructuring last year and that enabled us to refocus our resources on strengthening our core businesses and improving our margin,” he said.
Lee said the change in strategies had paid off for the company as shown by its earnings recently when its profit before tax improved to RM6.5mil in the third quarter ended Oct 31, 2003, compared with RM61,000 in the previous corresponding period.
Its operating profit translates into higher earnings per share of 6.24 sen compared to a net loss of 0.65 sen per share in the same quarter last year.
The strong performance in the third quarter had also contributed to solid net profit of 4.40 sen per share for the first nine-month period this year, compared with 2.5 sen during the same period last year.
Moving forward, Lee said, the company would bank on its experience and skills to take it to the next level.
As for manufacturing activities, George Kent's water meter brand and fibreglass reinforced polyester water tank were known for their quality and the company would continue to ensure that their position in the market be improved further, he said.
“We are also taking various steps to reduce costs and improve our margin,” Lee said, adding that the company might also expand its production lines to accommodate the market demand.
In water project, George Kent will continue to build its niche in the sector.
“There are other mechanical and electrical contractors out there, but we believe we have the edge among our competitors because of our strong emphasis on project development,” Lee said.
He added that George Kent was currently the only company in water-related projects, which had a manufacturing facility, thus allowing it to provide the entire range of services and supply the products directly to its customers.