KUCHING: KKB Engineering Bhd has approved RM15mil in capital expenditure (capex) this year to fund further capacity expansion of its steel fabrication yard at Jalan Bako here to undertake major onshore fabrication jobs for the oil and gas (O&G) industry.
The steel fabricator had invested about RM25mil last year to build a huge workshop at the yard to beef up capacity and technology to prepare for more and bigger fabrication jobs for offshore structures such as topside.
The workshop, with a height of 50 metres, can accommodate multiple projects up to 18,000 tonnes per annum of works to be carried out simultaneously.
It is equipped with an overhead heavy lifting equipment and state-of-the-art machinery and automation.
The yard currently has nine covered workshops with a dedicated 30,000-tonne loadout jetty on the Sarawak River bank.
According to KKB group executive director Kho Pok Tong, the new capex of RM15mil is to finance phased expansion of the fabrication yard.
“This will continue with our progressive capacity enhancement in stages planned until 2022 as part of an overall strategic plan and positioning of the group for future works, ” he added.
Last month, KKB O&G subsidiary OceanMight Sdn Bhd was awarded two new contracts from Petronas Carigali Sdn Bhd and PTTEP Sarawak Oil Ltd for the provision of engineering, procurement, construction, installation and commissioning (EPCIC) of well-head platforms in Bakau (under Baram Delta gas gathering project on the Barconia field, offshore Miri) and the provision of engineering, construction and commissioning of Pemanis satellite topside.
The two contracts are worth a combined RM270mil.
A six-year Petronas frame agreement (awarded in December 2018) opened up more opportunities for OceanMight to bid for contract works involving the provisioning of engineering, procurement and construction of fixed onshore structures by Petronas. OceanMight is one of the few Petronas-licensed fabrication yards in Malaysia.
Kho said the group is identifying new business opportunities in major onshore fabrication projects, either domestic or international, in collaboration with OceanMight and other strategic partners.
He said only with enhanced fabrication capacity would it help the group to work towards its target of achieving an order book of RM1bil by 2021. The group’s current order book stands at RM818mil, with progressive billings over the next 27 months.
The group’s tender book at end-January 2020 is RM242mil, with the outcomes of the projects it has bid for expected to be known in the second and third quarters of 2020.
“We expect to submit new tenders for the engineering and manufacturing sectors as well as the O&G industry worth RM150mil to RM200mil between April and September this year, ” he said.
KKB is the sole manufacturer of steel water pipes in Sarawak, and the group is involved in several major construction projects, such as the Pan Borneo Highway project and the billion-ringgit Sarawak water grid programme.
On the mega Sarawak Second Trunk Road project, Kho said KKB and its joint-venture partner would selectively bid for its work packages.
According to Sarawak Deputy Chief Minister and Minister for Infrastructure and Ports Development Tan Sri James Masing, 11 sub-packages (under three main packages) of the project would be tendered out early this year.Covering 236 km, the second trunk road will provide an alternative route to the Sarawak coastal road network and Pan Borneo Highway (786.4 km), currently under construction and upgrading works.
KKB, which achieved impressive earnings growth with the group’s net profit jumping to RM48.3mil in the financial year ended Dec 31,2019 (FY2019) (FY2018: RM17.6mil) on higher revenue of RM559mil (RM412.5mil), is upbeat on its prospects going forward.
“The demand for steel water pipes is expected to remain firm, buoyed by ongoing and upcoming water related infrastructure projects planned under the Sarawak water grid programme, ” said the company.
The Sarawak government has allocated RM2.8bil (2018-2020) to fund phase one of the water grid programme which will comprise more than 240 projects, from water treatment plants to distribution network system, pipe replacement to non-revenue water management and other works.
Kho said KKB, which turns 58 year-old this year, has delivered respectable profits under a continued challenging business environment as its group revenue surpassed the RM500mil mark last year.“For 2020, we are cautiously optimistic with prudent and risk managing of the Covid-19 outbreak and focusing on the supply chain, ” he added.