Posted on 29 Apr 2015
KKB’s group executive director Kho Pok Tong believed that the company has the potential to secure some works for its fabrication division, particularly its oil and gas (O&G) fabrication unit under its associate company, OceanMight Sdn Bhd (OMSB) in the medium- to long-term period.
As at end of March 2015, KKB has a tender book of more than RM635 million with RM550 million comprising tenders for O&G projects while its engineering and manufacturing division has a tender book of approximately RM85 million.
“We are very focused on our long-term,direct participation in the O&G sector.
“KKB, through OMSB,is bidding for contracts in the O&G sector.
“We are cautiously optimistic that, subject to any improvement in the global oil prices, it may be that oil majors would consider to proceed with field developments sometime the later part of 2H15.
“(Besides that), OMSB continue to embark upon and identify viable new strategic business opportunities, especially in the O&G sector to acquire technology and competitive edge in the medium to long term to better position the group in its competitive bidding for projects in Malaysia.
“At the same time, our traditional core business of steel fabrication will continue to support the earnings of the company,” Kho said to The Borneo Post yesterday after the company’s 39th annual general meeting (AGM) at a hotel here yesterday.
Kho revealed that OMSB has collaborated with established Australian company,Icon Engineering Pty Ltd (Icon Engineering), an oilfield services contractor to identify, secure and perform O&G field developments in Malaysia.
“We have signed a Consortium Agreement with Icon Engineering to further strengthen our focus on marginal field development and to ensure that we meet the clients’ requirements where cost , speed andversatility is key,” Kho said.
On another note, he said KKB has successfully completed its fabrication of structural steel works for Phase 1 Petronas MLNG Train 9 Project in Bintulu with a contract sum of approximately RM17 million, other ongoing fabrication of steel frame works for CMS Clinker Plant, the supply of low or high tension steel poles and the subcontract works for fabrication of platforms and others.
Additionally, Kho shared that the company’s fundamentals remained strong with its balance sheet in a healthy position with very low gearing.
With a strong balance sheet, he added KKB is confident to bid for and participate in future major infrastructure-related projects when the opportunities arise be it in Sarawak or Sabah.
Meanwhile, KKB in a filing to Bursa Malaysia on April 27 said the company has registered an impressive financial performance in 1Q15.
KKB announced its net profit in the first quarter of 2015 (1Q15) that soared seven-fold to RM28.61 million as compared with the same corresponding period last year while revenue rose by 80 per cent year-on-year (y-o-y) to RM76.7 million.
The company in its notes accompanying the release of its 1Q15 financial results explained that the improved profit was attributed to higher profit margin from both its engineering and manufacturing sectors specifically steel fabrication and steel pipes manufacturing divisions.
KKB added the higher revenue generated in 1Q15 was due to growth in turnover from the steel pipes manufacturing division.
In the meantime, research firms AmResearch Sdn Bhd (AmResearch) and the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) maintained their bullish outlook for the company.
MIDF Research opined that the O&G fabrication contract which OMSB secured in September last year has boosted the company’s bottomline in 1Q15.
The research firm has revised upwards its earnings forecast for KKB’s financial year 2015 (FY15) and FY16 by 50 per cent and 19 per cent respectively due to better revenue recognition progress and improved profit margin.
As for AmResearch, it foresees better O&G prospects and the potential of increased state government spending on rural infrastructure projects to benefit KKB over the medium to long term.
Hence, both research firms maintained their ‘buy’ recommendation for KKB, valuing the company’s shares price fair value at RM1.96 per share and RM2.05 per share respectively.
As at closing yesterday, its share price rose 12 sen to close at RM1.76 with 3.89 million shares transacted.
