GKENT ... Sep10

George Kent (M) Bhd is bidding for more than RM1 billion worth of domestic and overseas projects for its infrastructure investments, water and construction (IWC) division which is expected to be the main income generator for the group in the near future.

The group was eyeing five IWC projects of which three are in infrastructure investments and the others in construction. Overseas projects tendered for were in China and Vietnam. It would take between three and six months for negotiations in the tender process to be completed and that the group anticipated “some encouraging outcomes” some time next year (2011).

The group had announced that it had secured two water infrastructure projects with its consortium partners — the RM317.6 million package Lot 1-3A Semantan intake pumping station (Pahang-Selangor Raw Water Transfer Project) and the RM129.8 million Panching Water Treatment Works, Kuantan, for the East Coast Economic Region development.

The IWC division’s unbilled orderbook was at an all-time high of RM260 million and the division was expected to grow and account for half of the group’s revenue for the financial year ending Jan 31, 2012 from about 30% currently.

In its first quarter ended April 30, 2010 (1QFY11), IWC contributed about RM9.5 million of George Kent’s RM32.47 million revenue while the balance came from the manufacturing, water meters and industrial products (MMI) division.

It expects the IWC division to surpass the MMI division in terms of revenue contribution in the near future however it intends to expand both divisions. The group would also continue to grow its MMI division as a core business with a niche market.

George Kent planned to become a leading contract manufacturer for meter products in the next few years. Meanwhile, the group also aims to strengthen its own meter products line and market them internationally.

They have a 65% market share locally for the various infrastructure meters. Its brass water meters, parts and non-meter products are sold locally and also in Singapore, Thailand, Indonesia, the Philippines, Australia, Hong Kong and the Middle East.

“Sustainability” of continuous growth was among the criteria that the board would evaluate if it were to consider a dividend policy. The group’s three-year track record for growth might not be “conclusive judgment” for such policy.

George Kent declared gross dividends (interim and final) amounting to four sen per share of 50 sen each for the financial year ended Jan 31, 2010. For FY10, the group’s net profit jumped 79.8% to RM20.12 million from RM11.19 million in FY09 on the back of stronger revenue of RM125.08 million versus RM106.93 million.

For 1QFY11, George Kent’s net profit rose 48% to RM2.92 million from RM1.97 million a year ago due to higher sales achieved for meters, meter parts and project-related works. Revenue climbed 55.1% to RM32.47 million from RM20.93 million.

The group recorded basic earnings per share of 1.3 sen for 1QFY11 while net asset per share was 64.53 sen. Its net cash position stood at RM26.65 million or 11.83 sen per share as of April 30, 2010.

According to George Kent’s FY10 annual report, the group is 38.07% controlled by Tan Sri Tan Kay Hock and his wife Puan Sri Tan Swee Bee. Interestingly, Tan Sri Khoo Kay Peng, chairman and chief executive of Malayan United Industries Bhd (MUI), was also listed in the annual report as owning some 23.56 million shares or a 10.46% stake in George Kent as at May 19, 2010, through MUI.

Khoo bought another 500,000 shares, through indirect interests, in George Kent on May 20 and 21, 2010. He had been increasing his stake in George Kent from 8.66% as at May 26, 2009.

Tan Sri Khoo is an investor and he has been buying into George Kent through the open market. It only indicates that he has confidence in George Kent.