George Kent eyes diversification in O&G sector

PUCHONG: George Kent (Malaysia) Bhd, which is tendering for RM15 billion worth of jobs including those for the mass rapid transit (MRT) line 2 project, is looking to diversify its presence into the oil and gas sector.
Speaking to reporters after the company's AGM and EGM here yesterday, its chairman Tan Sri Tan Kay Hock (pix) said it is still studying the proposal to tap into the oil and gas industry, but will start with the service engineering segment.
"We want to go into the oil and gas sector, but with the right space and target," he stressed, declining to elaborate further.
Tan explained however that the oil and gas sector is not a new venture for the group considering that it used to have supply services to petrol pumps around the country.
On the group's tender book he said more than RM10 billion of jobs it has tendered for are railway jobs, while the water construction segment carries the remaining RM2 billion to RM3 billion.
George Kent's bid for more railway jobs come after a consortium, led by George Kent won the RM1.1 billion Ampang Line LRT extension project in July 2012.
Tan said the LRT extension job has been progressing well, with one third of the work completed and contributing to the group's earnings.
With more tenders submitted, the firm hopes to grow its order book to at least RM5 billion over the next three years compared to more than RM1 billion currently.
"We're optimistic and excited about the company's future, we'll continue to deliver sustainable growth," Tan said.
For its water meter division, he said he expects revenue to jump five-fold in the next two to three years versus just over RM100 million currently, supported by innovative technology and enlarged overseas presence.
"Not just water meters only, but we also have smart meters and polymer meters, five to 10 years down the road, we won't be left behind, we want to be at the forefront," he said.
The firm manufactures more than 2 million water meters yearly, with a total of 40 export markets, with plans to expand its footprint abroad, especially in commonwealth countries such as New Zealand, Australia and the African continent.
Currently the firm is mainly involved in infrastructure construction and the water meter sector.
According to Tan, the company holds nearly RM200 million net cash at hand.
At its EGM yesterday, George Kent received the shareholders' nod for the bonus issue of 75.10 million shares on the basis of one bonus share for every three existing shares held.
For the first quarter ended April 30, 2014, George Kent posted a net profit of RM6.47 million against RM5.54 million a year ago, thanks to higher profit margin.
Tan opined that George Kent's share price has underperformed its industry peers, pegged at 11 times price-to-earnings ratio compared with the 17 times of its peers.
On a separate note, George Kent said in a filing with Bursa Malaysia yesterday that it had recorded a surplus of RM29.7 million following the revaluation exercise of its two properties in Puchong and Papua New Guinea.
"This will result in an increase of approximately 13.18 sen in the net asset per share of George Kent from 111.29 sen to 124.47 sen as at 31 July 2014," it added.