KUALA LUMPUR (Aug 22): Kelington Group Bhd’s second quarter net profit rose 15.89% to RM5.1 million from RM4.4 million a year earlier, thanks to higher contribution from its Singapore and Malaysian operations, which more than offset the decline from China and Taiwan.

Earnings per share for the quarter ended June 30, 2019, however, fell to 1.71 sen from 1.79 sen previously, the engineering firm said in a filing with Bursa Malaysia.  

The group has proposed a first interim dividend of one sen per share, unchanged from last year.

Kelington’s first quarter revenue rose 6.56% to RM95.08 million from RM89.23 million a year ago. Singapore operations’ contribution rose 73% to RM68.94 million from RM39.81 million, mainly supported by the three-fold increase in the process engineering segment there.

That supported the group amid the 40.51% decline in China’s contribution to RM51.41 million from RM86.41 million, on lower progress billing from a nearly-completed ultra-high purity (UHP) project there.

“Nevertheless, the UHP division remained as the anchor revenue contributor to the group at 59%, followed by process engineering (35%), general contracting (5%) and industrial gases (1%),” said Kelington.

For the first half of the year, Kelington’s net profit was up 15.47% to RM9.94 million, compared with RM8.61 million in the same period last year, on lower cost of sales.

Revenue, however, eased 2.44% to RM171.59 million from RM157.78 million, no thanks to the lower progress billing for the China UHP project.

In a separate statement, Kelington chief executive officer Raymond Gan attributed the better profit margins achieved to the group’s re-focus on projects with higher-yielding margins.

“Looking ahead, we expect the growth to continue to be driven by the Singapore operations as it accounts for more than 50% of our current outstanding order book of RM312 million. Project order flows from China has also shown positive progress,” it added.

The group’s order book has grown to RM486 million, with tender book of around RM1.2 billion.

Kelington is also in the midst of initiating its new business segment in manufacturing liquid carbon dioxide (LC02).

“The commissioning of the manufacturing of the LC02 business is on track with production expected to commence this year. We anticipate positive contribution from this new business from FY20 onwards,” said the group.

Kelington shares closed unchanged at RM1.27, giving the group a market capitalisation of RM395.55 million.