KUALA LUMPUR: George Kent (M) Bhd’s (GKent) shares fell 2.7% in early trade on Wednesday after its earnings fell 37% in the first quarter ended April 30.
GKent, whose core businesses are engineering and water meters, fell 2.7%, or three sen to RM1.08 with 1.13 million shares traded.
GKent’s net profit dropped 37% to RM13.5mil in the first quarter ended April 30 2019 from RM21.5mil a year ago, due to lower profit from the engineering division.
Its revenue for the quarter fell 17% to RM82.78mil from RM99.76mil previously.
The group is committed to delivering on its order book of over RM5bil, which provides earnings visibility for the next few years.
Kenanga Research said GKent’s 1Q20 core net profit of RM13.5mil makes up 16%/ 19% of the house and consensus full-year estimates respectively.
“We deem that its results to be within expectations as GKent’s results are generally weaker in the first half, coupled that LRT3 work progress has yet to pick up in pace.
“No dividends declared as expected. No changes to FY20-21E earnings. Maintain market perform with unchanged SoP-driven target price of RM1.15,” Kenanga said.
The research house believes that GKent outlook is improving but still highly dependent on the execution of LRT3.
“Our target price implies FY20E PER of 7.8x, which is in-line with our ascribed multiple of 6.0-11.0x within the construction space,” it said.