PETALING JAYA: Engineering specialist company GEORGE KENT (M) BHD aims to increase the earnings contribution from its metering business to 50% in the medium term.
According to George Kent chairman Tan Sri Tan Kay Hock, the group has been channelling substantial resources towards expanding its existing water-meter market in over 40 countries, as well as penetrating into new ones with significant potential.
“We have dedicated personnel who actively pursue M&A (mergers and acquisitions) and organic growth opportunities, while strengthening our technology partnership with our existing suppliers and partners,” Tan said.
“These efforts should expand our metering business’ contribution to earnings to 50% in the medium term,” he explained in the company’s annual report.
George Kent’s metering division accounted for 17% of the group’s earnings for the financial year (FY) ended Jan 31, 2019, compared with 19% in the preceding year, while the group’s engineering division - which focuses on rail, water supply and hospital infrastructure projects – accounted for the remainder (and bulk) of the group’s earnings.
George Kent is a major water-meter supplier to Hong Kong and Singapore water authorities.
Tan said demand for the group’s water meters continued to outstrip supply.
George Kent’s integrated plant in Puchong, Selangor, had an annual capacity of three million water meters.
The group produced about 2.4 million water meters in FY19.
In Malaysia, the group’s automated meter reading solution is currently being tested by water authorities in several states.
Tan said commercialisation of the automated meter reading solution was expected to materialise in FY20.
“In addition, we are participating in tenders under the non-water revenue initiative of the national water meter replacement programme, which should further catalyse domestic sales of our water meters,” he said.
Meanwhile, George Kent would also focus on growing its engineering division by capitalising on opportunities in the domestic and regional railway space, as well as improving prospects in the water infrastructure sector domestically and abroad.
The group is currently working on boosting its competitiveness and strengthening its presence in the fields of rail-related technology, as well as parts and component manufacturing.
On the water infrastructure space, George Kent is actively seeking opportunities that could generate long-term and sustainable income to the group.
George Kent’s construction order book, valued at RM5bil currently, was expected to ensure earnings visibility over the next few years, Tan said.
George Kent posted lower net profit of RM84.9mil in FY19, down 31.7% from RM124.4mil in FY18, while its revenue fell 30.2% to RM430.7mil from RM617mil previously.
The group’s financial performance in FY19 was affected in part by the suspension and deferment of the Light Rapid Train (LRT3) project in June 2018, following a decision by the Pakatan Harapan-led government to review all big ticket infrastructure projects in Malaysia.
After numerous discussions, the LRT3 project was given the go-ahead at a reduced cost by the government.
George Kent, through its 50:50 joint-venture company MRCB George Kent Sdn Bhd, was given a contract worth RM11.4bil early this year.
Construction works for the LRT3 are expected to resume in the latter part of 2019.