Thursday 28 Mar 2024
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KUALA LUMPUR (May 21): Kejuruteraan Asastera Bhd (KAB) is optimistic over prospects for the country's electrical and mechanical engineering sector despite the change in government following the 14th General Election.

Managing Director Datuk Lai Keng Onn said while it was too early to form any expectation, the market had generally reacted well to Prime Minister Tun Dr Mahathir Mohamad’s statement on the review of government-related projects.

“This is definitely good news, as Dr Mahathir also mentioned about getting more participation from local businesses in domestic projects,” he told reporters after the company’s inaugural annual general meeting and extraordinary general meeting here today.

Lai said the zero rating of the Goods and Services Tax effective June 1 would indirectly help KAB improve its cash flow in the near term with a neutral impact overall for the company.

“During the transition period until the new tax (Sales and Service Tax) is introduced, this should bode well for the industry, giving more spending power to the consumers and likely boosting our business further,” he added.

On expansion plans, Lai said KAB, which is headquartered in Kuala Lumpur, was currently in the midst of setting up a branch in Johor Bahru to oversee the southern region of the peninsula.

This would be completed this year, followed by a branch in Penang for the northern region, he said.

“We are also expanding into the air-conditioning and ventilation system business, which will contribute (to our revenue) in the next two to five years time.

“Besides that, we will also invest in the Internet of Things where we will be using the Internet to monitor and control the performance of electrical consumption, which will also enhance our position in the electrical industry and maintenance sector,” added Lai.

He noted that capital expenditure, which should not be substantial, would be fully funded internally.

The company’s order book stands at RM223 million, which will keep the company busy until 2020.

The jobs are mainly in the Klang Valley area, and 90 per cent involve its core electrical business.

“We are also securing another new job worth RM50 million (KAB is waiting for the letter of award) and foresee more coming in. Our current tender book is about RM337 million and we anticipate a 20-30 per cent success rate in securing jobs,” said Lai.

For the financial year ended Dec 31, 2017 (FY17), KAB recorded revenue of RM114.55 million and a net profit of RM6.78 million.

It incurred one-off non-recurring listing expenses of RM3.34 million during FY17 in relation to its listing on the ACE Market of Bursa Malaysia.

The company's core earnings, excluding the non-recurring listing expenses, amounted to RM9.38 million for the year.


 

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