New unit helps boost HSS Engineers earnings

PETALING JAYA: Engineering and project management services firm HSS Engineers Bhd’s net profit rose 132.29% to RM6.9mil for the second quarter ended June 30, as maiden contributions from its recently-acquired SMHB Engineering Sdn Bhd started flowing in.

In March, HSS completed the 100% acquisition of SMHB Engineering for RM270mil, an engineering and project management consultancy firm specialising in the water industry.

SMHB Engineering contributed RM3.3mil or 47.8% of the group’s second-quarter net profit, while the remaining RM3.6mil came from HSS.

Thus, earnings per share rose to 1.6 sen from 0.85 sen in the same quarter of the previous year. Revenue, meanwhile, rose 45.43% to RM55.07mil.

Segment-wise, the engineering services segment recorded a 155.9% increase in revenue to RM40.7mil in the second quarter from RM15.9mil in the previous corresponding quarter, due to higher progress revenue from HSS and new revenue from SMHB Engineering.

This was offset by lower revenue from the project management services segment of RM11mil in the second quarter versus RM15.3mil previously.

The group’s enlarged order book now amounts to RM630.8mil across the highway, railway and water sectors.

As of June 30, the group had cash of RM20.88mil, an increase from RM16.78mil in the same period of the previous year.

On a six-month basis, net profit rose 26.94% to RM7.78mil on the back of a 32.7% jump in revenue to RM89.09mil.

HSS group executive vice-chairman Tan Sri Kuna Sittampalam is positive on the group’s outlook, given the smooth post-acquisition integration and healthy order book of the enlarged entity.

On the group’s prospects, Kuna said it was mindful of a number of developments in its favour, especially what lies ahead in the water sector in the near future.

There is anticipated infrastructure works to be rolled out to reduce non-revenue water from an average of 35.2% currently to the internationally accepted level of 20% to 25%, and to also ensure uninterrupted supply to cope with increasing water demand and addressing the low reserve margin (acceptable level is 15%-20%) in the country.

“Our field of expertise lies in the engineering design as well as con- struction supervision in both the water resources works and water supply systems.

“We are well positioned to provide our services for the whole value chain in the water sector, having been involved in the planning of the nation’s water resources for over 50 years,” said Kuna.

On top of that, HSS is eyeing opportunities in the infrastructure space that are present in South-East Asia, particularly in Indonesia and the Philippines, in the areas of highways, railways, ports, airports and water resources.

“We are optimistic of extending our regional footprint in the near future, having successfully delivered two projects in Indonesia recently.”

The stock was down one sen to 93.5 sen on a volume of 3.23 million shares.