Lower Q3 profit for George Kent, dividend 1.5c

George Kent group chairman, Tan Sri Tan Kay Hock

KUALA LUMPUR: George Kent (Malaysia) Bhd reported a decline in net profit and revenue in the third quarter ended Oct 31, 2018 due to lower contribution from the engineering segment but it still declared an interim dividned of 1.5 sen a share.

George Kent, whose core businesses are engineering and water meters, announced on Wednesday its net profit fell by 28.3% to RM20.55mil from RM28.67mil a year ago.

Its revenue fell by 18.5% to RM103.55mil from RM127.08mil a year ago.  Earnings per share were 3.7 sen compared with 5.1 sen a year ago.

It said the engineering revenue fell 21% to RM65.13mil from RM82.14m a year ago. Profit from the segment fell 23% to RM24.83mil from RM32.15mil. Construction accounts for 92% of the revenue and 91% of segment revenue of the engineering division.

“The group mainly derives its revenue from Malaysia, other Asean countries, Hong Kong and Papua New Guinea. Its core businesses arec entredinthewaterindustryandengineeringworks.

For the nine months, it reported a decline in net profit, down 8.1% to RM66.67mil from RM72.55mil in the previous corresponding period. Its revenue fell by 28.7% to RM316.24mil from RM444.08mil a year ago.

George Kent said nine month rsults were commendable with only a nominal contribution from LRT3 as the project is being renegotiated. 

“Prasarana Malaysia Bhd issued a letter of appointment dated Nov 2, 2018 to MRCB George Kent Sdn Bhd for the award of the LRT3 project at a fixed contract sum of RM11.85bil. 

“Negotiations are ongoing to finalise the terms of the new contract, while the project is being redesigned based on the revised specifications. Construction is anticipated to resume in the second half of 2019,” it said.

The company said water meter orders continue to be strong. The group recently won the Public Utilities Board of Singapore’s (PUB) tender to deliver 110,000 meters over six months beginning February 2019. This was the fourth consecutive win by George Kent to supply water meters to PUB since 2012. 

Geroge Kent continues to export its meters to over 40 countries around the world. It said that its strong order book would provide earnings visibility over the next few years. The group is also on the lookout for opportunities in the regional railway space, leveraging on its expertise as rail systems specialist in domestic railway projects. 

The group’s established network with international rail specialists bolsters its standing for projects requiring international collaborations through joint ventures or other forms of strategic alliances.

George Kent chairman Tan Sri Tan Kay Hock said: “The results for the quarter under review continue to be credible, taking into account the nominal contribution from LRT3 as the project is being renegotiated. construction is expected to resume in the latter part of 2019.

He said the group was focused on its strategic plan to broaden its income base. This entails substantial investment of resources, both human and financial, into growing its metering and other water-related businesses and investments. 

“The group is also actively pursuing Regional railway opportunities, whilst being committed to delivering on our existing order book,” he said.