George Kent’s endocrine hospital contract an expected win

KUCHING: Analysts say George Kent (Malaysia) Bhd’s (George Kent) endocrine hospital contract win was an unsurprising development.

George Kent announced in a press release on Bursa Malaysia that the group had accepted the Letter of Award dated December 15, 2016 from Jabatan Kerja Raya Malaysia, in respect of the group’s tender to design and build a 220-bed endocrine hospital in Precinct 7, Putrajaya for a contract sum of RM364.9 million.

According to the research arm of Hong Leong Investment Bank Bhd (HLIB Research), this job win does not come as a surprise given management’s previous guidance that the group was pursuing it.

HLIB Research reckoned that risk associated with this hospital job is minimal as George Kent has undertaken such works before.

“In terms of hospital track record,GeorgeKenthascompleted Phase 1 worth RM98 million of the Kuala Lipis Hospital and is currently executing Phase 2, worth RM57 million,” it said in a report.

“Last month, George Kent also secured the 150- bed Tg Karang Hospital valued at RM277 million.”

HLIB Research noted that with this hospital contract in the bag, George Kent’s year to date (YTD) job wins amounted to RM1.1 billion.

The research arm estimated the group’s orderbook to now stand at RM6 billion.

This translated to a superior cover ratio of 14.5-fold on financial year 2016 (FY16) construction revenue, the highest within the research arm’s sector coverage.

On a potential metering boost, HLIB Research pointed out management had shared that George Kent recently received an order for 30,000 units of water meters in Selangor, to be delivered on a fast track basis.