Kelington banks on industrial gas to spur earnings growth

KUALA LUMPUR: Integrated engineering solutions provider Kelington Group Bhd aims to develop its industrial gases division to represent about 30 per cent of the group’s earnings within the next five years.

“We are constantly exploring new business opportunities to grow the division in terms of product range and geographical reach,” Chief Executive Officer Raymond Gan said in a statement.

He said the company was confident that the recent foray into the supply of industrial gases would allow it to enjoy a steady recurring income stream and enhance its earnings visibility.

“Kelington’s first industrial gas 10-year supply contract, involving the setting up of an on-site nitrogen gas generator for one of the major photovoltaic manufacturers, has been completed.

“Under this contract, Kelington will receive a recurring fixed facility fee over a period of 10 years, commencing this financial year ending Dec 31, 2018,” the company said.

Kelington said the contribution from the industrial gases division would also be further boosted with the start of the group’s liquid carbon dioxide (CO2) manufacturing plant.

Located in Kerteh, Terengganu, the plant will purify and liquefy the CO2 waste gas of the Petronas Gas Processing Plant.

Kelington has signed a 15-year supply agreement to acquire the CO2 waste gas to ensure uninterrupted supply of raw material.

It said the liquid CO2 plant was expected to begin production in the second half of 2019.

Gan said the company is confident that demand for liquid CO2 would be strong, especially from the food and beverage industries, in making carbonated drinks, refrigeration and freezing of food.

Kelington said its foray into the industrial gases division complemented the group’s existing project-based business model of providing engineering services, which had performed well.

The total value of new projects secured in the financial year 2017 rose by 16 per cent to RM374 million from RM323 million in the previous year.