George Kent 4Q halves on lower engineering contribution, recommends 2.1 sen dividend

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KUALA LUMPUR (Mar 26): Infrastructure engineering firm George Kent (Malaysia) Bhd’s net profit for the fourth financial quarter ended Jan 31, 2015 (4QFY15) has more than halved to RM8.28 million or 2.8 sen per share, from RM18.48 million or 6.2 sen per share a year ago, dragged by lower revenue from its engineering division.

Revenue was at RM117.23 million, down 48.32% from RM226.81 million that it saw in 4QFY14. The group recommends a 2.1 sen dividend for the quarter, its quarterly result filing to Bursa Malaysia today showed.

George Kent (fundamental: 2.1; valuation: 2.4) said revenue from its engineering division contracted by 61% to RM92.5 million, compared with RM235.72 million a year ago.

Engineering is the largest revenue contributor to the group. It contributed 78.91% to George Kent’s total revenue 4QFY15 revenue.

George Kent said the weaker revenue was mainly due to the completion of the Pahang Selangor Raw Water Transfer project in 2QFY15, and the Panching Water Treatment Plant project in 4QFY14.

“Further[more], there is a rescheduling of the work components for the Ampang LRT Line Extension project,” the group said.

According to George Kent’s press statement, the Ampang LRT Line Extension project is the main contributor to its Engineering division’s revenue this quarter.

“Correspondingly, segment profit of RM32.57 million for the current period is 27% lower, as compared to RM44.82 million for 4QFY14,” it said.

Cumulatively, the group’s FY15 annual net profit fell 22.47% to RM28.07 million, from RM36.21 million in FY14; revenue was at RM353.16 million — down 30.25% from RM506.30 million in FY14.

For the full FY15 year, the engineering division made up 72.64% of George Kent’s total revenue, while the metering made up the remainder 27.36%.

Metering saw a higher profit of RM19.2 million, up 6.47% from RM18.04 million in FY14.

“The growth in sales and volume of our meters for the export market is very encouraging and shows tremendous growth potential. We will continue to seek out opportunities along this line to grow both our revenue and bottom line,” group chairman Tan Sri Tan Kay Hock said.

Moving forward, George Kent said it is optimistic of the group’s prospects for FY16.

The Edge Weekly had reported in its latest Mar 23-Mar 29 issue, quoting sources, that George Kent is one of six shortlisted project delivery partner (PDP) candidates for Prasarana Malaysia Bhd (formerly known as Syarikat Prasarana Negara Bhd)’s proposed development of the RM9 billion LRT Line 3 project.

As at 2.41pm, George Kent’s counter was up 3 sen or 2.36% to RM1.30, giving it a market capitalisation of RM396.54 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)