George Kent back on track with focus on project delivery
KUCHING: Analysts are more optimistic on George Kent ( Malaysia) Bhd’s ( George Kent) prospects as the company focuses on delivering its current projects.
Following a meet with George Kent’s management, the research team at Kenanga Investment Bank Bhd ( Kenanga Research) said it came away feeling reassured by its performance.
“They (George Kent) are working relentlessly in the design change for LRT3 of which they are hopeful of finalising in the second half of 2019 (2H19).
“The finalisation of design will allow George Kent-MRCB to proceed with the construction of LRT3 full swing.
“As for its metering division, we are optimistic with the potential for their smart meters, being an essential part of the Internet of Things trend,” it opined.
It noted that George Kent’s management indicated that its current core focus would be on the delivery of LRT3 and its existing ongoing projects, that is the LRT2, MRT2, and public hospitals with an estimated outstanding orderbook of RM5.4 billion.
“Hence, management is not looking to participate aggressively in other jobs in the near term,” it added.
While its current progress is still at circa 10 per cent, Kenanga Research said George Kent was still optimistic of meeting the construction timeline as it has been rescheduled to 2024.
“Currently, management is expecting the redesign of the project to be completed by 2H19 and hopes to progress to full swing as its sub-contractor would be able to proceed with works on stations upon receiving the final designs.
“That said, now that George Kent- MRCB JV is no longer the PDP but the main contractor for LRT3, they are working closely with banks to secure financing for the working capital needs for LRT3.
“We are confident that they will be able to secure financing given that both George Kent and MRCB’s balance sheets remain healthy, which George Kent is in net cash position while MRCB is lowly geared at 0.2 folds,” Kenanga Research said.
As for its metering segment, it said, George Kent is looking to double its effort in promoting its smart metering solutions to various state governments and countries within the Southeast Asia region.
“Its smart meters are an addon to existing meters that offers fixed network reading or mobile network reading, which allows water players to bill customers effortlessly.
“While it is still at the pilot stage, as they are working with mobile operators in testing the transmission of data, we believe that should it take off, it would be a strong growth factor for its metering division.
“We anticipate the smart meters could potentially grow its metering revenue by a minimum of 50 per cent, should George Kent is able to package its smart meters together with its existing products,” it opined.
All in, Kenanga Research maintained its ‘market perform’ call on the stock.