RM1.3bil order book to keep KKB busy

KUCHING: Steel fabricator KKB Engineering Bhd expects its current order book of RM1.26bil to keep the group busy until 2020, said group executive director Kho Pok Tong.

He said the group was now awaiting the outcome of its bids worth RM73mil for contracts in the engineering and manufacturing sectors.

“We expect some of the contracts to be awarded in the fourth quarter of this year,” Kho told StarBiz.

KKB’s biggest project thus far would be its joint venture with WCT Holdings Bhd for an RM1.29bil work package under the Pan Borneo Highway project.

KKB is also bidding for construction sub-contract works for the highway’s other work packages and for the supply of structural piles for bridges, steel water pipes, low and high-tension steel poles, guard rails as well as the relocation of water pipes for the biggest infrastructure project in Sarawak.

The group has three steel manufacturing plants – two in Kuching and one in Kota Kinabalu – with a combined production capacity of 45,000 tonnes per annum.

KKB is also the sole manufacturer of concrete-lined and polyurethane-lined steel water pipes of various sizes in Sarawak.

Given the group’s net cash position of about RM110mil and no gearing, Kho believes the group would be in a strong financial footing to bid for more sizeable projects.

For the second quarter ended June 30, 2017 (Q2 2017), KKB reported a group net loss of RM6.9mil, a reversal from a net profit of RM494,000 in Q2 2016, despite a sharp jump in revenue to RM46.9mil from RM27.2mil previously.

The group attributed the dismal performance to the competitive environment, coupled with the escalation of cost due to the weakening of exchange rates, volatility of global raw material prices and the direct overhead cost mainly in the steel fabrication business.

In the first half of 2017, KKB posted a net loss of RM8.1mil against a net loss of RM1.5mil in the previous corresponding period.

However, Kho is confident that KKB can produce improved results in the third and fourth quarters of 2017 despite a continued challenging outlook during the second half of this year.

“We hope to bring down the group’s net loss of RM5.7mil registered in financial year 2016 (FY16) by half or more in FY17,” he added.

Meanwhile, KKB’s 43%-owned associate company OceanMight Sdn Bhd has bid for four contracts worth RM353mil for the fabrication of offshore structures in the oil and gas (O&G) industry, said Kho.

Most of the bids were for engineering, procurement and construction-based contracts.

“We are hopeful that the oil majors will award these tenders by the first quarter of 2018. In fact, we are targeting between a 40% and 50% success rate in our bids,” added Kho, who is OceanMight director.

OceanMight has completed four offshore structure fabrication contracts worth about RM250mil since it was granted a major fabrication licence by Petroliam Nasional Bhd in 2013.

Last Thursday, OceanMight marked the completion of the fourth contract – Bunga Pakma wellhead riser – for Repsol Oil & Gas Malaysia Bhd after clocking 700,000 manhours without any lost time injury.

The Bunga Pakma topsides and jacket structures were loaded to a transportation barge and are set to sail away next week to its location in Block PM-3 in the shared Malaysia-Vietnam zone.

The Bunga Pakma facilities were designed to produce a maximium of 160 million standard cu ft per day of gas from scheduled May 2018.

Kho said the biggest contract completed by OceanMight so far was the wellhead platform for the Kinabalu redevelopment project for Repsol.

The new platform is expected to see its first oil by next month and is expected to add 7,000 barrels a day.

With crude oil trading between the US$50 and US$55 level, he anticipates oil majors to roll out more tenders from mid-2018.

In anticipation of more fabrication jobs from the O&G industry, Kho said the KKB group is expected to invest another RM15mil by December this year in automation, improvement and expansion of its steel fabrication yard in Jalan Bako, Kuching.

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