KKB Engineering sees sharp increase in cash reserves

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  • Wednesday, 20 Apr 2016

KUCHING: Steel fabricator KKB Engineering Bhd has strengthened its financial position with a sharp increase in its cash reserves.

The group’s cash and cash equivalent rose by some 40% to RM138.1mil for financial year ended Dec 31,2015 (FY2015) from RM98.6mil in FY2014.

Improvement was reported in the group’s loans and borrowings balance which was reduced to RM10mil from RM24.5mil during the same period.

“Trade and other receivables have decreased notably by RM26.7mil as compared to the preceding year in line with lower revenue recorded in FY2015 and improved collection period from the group’s debtors.

“Similarly, the decrease in trade payable is in line with the group’s operations and reduced activities undertaken by the engineering sector, in particular the civil construction division,” KKB management said in its newly issued 2015 annual report.

Chairman Datuk Kho Kak Beng said KKB group’s net profit climbed by 21.8% to RM29.1mil in FY2015 from RM23.9mil in FY2014, translating into earnings per share (EPS) of 10.1sen, up from 8.13sen.

The group’s net assets per share grew to RM1.17 from RM1.11.

The higher earnings were derived despite a 36.7% drop in group revenue to RM127.9mil from RM202mil in FY2014.

“The group’s financial position remains healthy with relatively low gearing,” he said, adding that during the year under review, the group’s acquisition of new heavy machinery and additional capital expenditure on the expansion of its steel fabrication yard in Muara Tebas near here was achieved with internally generated funds. Some RM98mil has so far been invested on the yard’s expansion.

Kho said KKB continues to strengthen and grow its core business in structural steel fabrication engineering for the oil and gas sector to complement its traditional structural steel fabrication business.

The group, according to Kho, is well positioned to undertake major onshore fabrication for the oil and gas sector.

OceanMight Sdn Bhd, in which KKB own a 43% stake, has commenced its third fabrication job for the oil and gas sector.

OceanMight secured a contract for the engineering, procurement and construction of wellhead platform for the Kinabalu redevelopment project from Talisman Malaysian Ltd in the third quarter of last year. The contract is scheduled for completion by mid-2017.

OceanMight has completed and delivered two other contracts – fabrication, hook-up and commissioning services for Tanjong Baram wellhead platform for 2H Offshore Engineering Sdn Bhd, and new helideck steel support fabrication and assembly for Baram-B Revisition 4 project for Petronas Carigali Sdn Bhd.

Kho said the winning of the third contract marked the beginning of KKB group’s entry into the major onshore fabrication for the oil and gas sector to enhance its core capabilities for sustainability and long term growth.

On the prospects and outlook for FY2016, KKB management anticipates a challenging year for the group in view of increased competition for fewer available project opportunities underpinned by the continued slowdown in the global economy.

“Depreciating ringgit exchange rates which are almost across-the-board will cause higher import bills and add sparks to domestic cost-push factors and inflationary pressure.”

The management said the group’s foray into the oil and gas sector would be required to perserve, stay resilient and overcome the period of slow activity.

“The group continues to focus on its efforts to identify viable,new a strategic and business opportunities especially in the oil and gas sector to acquire technology and competitive edge in the medium-to-long term and focussing on cost control and strong project execution in achieving our financial objective for this year,” the company’s report said.

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