This article first appeared in The Edge Financial Daily, on May 27, 2016.

KUALA LUMPUR: Pipe manufacturer Engtex Group Bhd has bagged a RM25 million contract from Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to supply ductile iron (DI) pipes as part of Selangor’s water pipe replacement programme.

In a statement yesterday, Engtex group managing director Datuk Ng Hook said the contract was a positive step in the state’s initiatives to replace ageing and leaking pipes in the water distribution system.

He said statistics from the National Water Services Commission (Span) stated that up to 1.5 billion litres of water were lost daily in Selangor in 2014, recording non-revenue water (NRW) at levels of up to 33.6% in the highly industrialised state.

Ng added that the group intends to invest approximately RM15 million in capital expenditure (capex) in order to enhance its competitive edge, in view of higher anticipated demand in the future.

He said the capex would be for new machinery to increase the DI pipe diameter from the current 800mm to 1,200mm, as well as to expand its mild steel pipe production capacity from 42,000 tonnes to 66,000 tonnes per annum.

Combined with the RM25 million contract, Engtex’s outstanding order book amounts to RM109 million. In addition, the group is tendering for projects worth about RM507 million, from both the public and private sector.

“The investment is timely to upgrade our capabilities and supply wider range of products in line with potential market requirements,” concluded Ng.

At the company’s annual general meeting yesterday, shareholders approved a final single-tier dividend of 0.75 sen per share in respect of financial year ended Dec 31 2015 (FY15), which will be paid out to shareholders on July 1.

Engtex’s shares were up four sen or 3.48% to RM1.19, with a market capitalisation of RM360.46 million.