KUALA LUMPUR (June 23): George Kent (M) Bhd shares rose 3.55% this morning after it reported a 23% rise in first quarter net profit at RM18.5 million from RM15.01 million a year earlier on higher revenue from its construction and water-meter units.

At 9.30am, George Kent rose 14 sen to RM4.08 with 535,600 shares traded.

George Kent said group revenue climbed to RM129.42 million in the first quarter ended April 30, 2017 (1QFY18) from RM122.96 million. George Kent undertakes its construction and water-meter businesses under its engineering and metering divisions respectively.

The company said it secured a major contract for the supply of water meters in 1QFY18. Including its engineering division contracts, George Kent said its total order book had grown to RM6.1 billion.

Meanwhile, Hong Leong IB Research has maintained its “Buy” rating on George Kent (M) Bhd with a higher target price of RM5.60 (from RM4.73) and said the company’s     1QFY18 core earnings of RM21 million (-42% q-o-q, +36% y-o-y) were above expectations.

In a note today, the research house said George Kent’s engineering profit before tax (PBT) was flat y-o-y (+3%) but down d-o-q (-55%) due to high base in 4QFY17 (traditionally strongest quarter).

“Tenders for LRT3 ongoing with awards in 3Q17; project value may increase from RM9 billion to RM12 billion.

“Metering PBT soared 160% YoY due to margin expansion from more domestic deliveries. Earnings forecast raised by 8% and 7% for FY18-19.

“Maintain Buy, target price raised from RM4.73 to RM5.60, remains our top construction pick,” it said.