Higher workflow to enhance KKB future earnings

KUCHING: KKB Engineering Bhd (KKB) expects increased workflow from contracts awarded earlier to enhance its near term financial peformance.

Group executive director Kho Pok Tong believes the group’s job momentum will progressively increase as KKB goes into full swing with jobs at hand, particularly the engineering, procurement and construction (EPC) of wellhead platform for Kinabalu redevelopment project from Talisman Malaysia Ltd (Talisman) in which the group secured in late September 2015.

“We expect pick up in workflow in the second quarter to fourth quarter of the year.

“We are cautiously optimistic that our financial performance will show improvement from the second half of the year as contribution from projects secured last year will gradually be advanced and recognised for the current financial year (ending Dec 2016).

“At the moment, we are busy implementing the projects that we have secured. (Besides, that), continuous focus on the recruitment of more qualified talents and pool of skilled workers especially for our oil and gas (O&G) unit in anticipation of increased activities (for the Talisman work) is in progress,” he told reporters after the company’s Annual General Meeting (AGM) yesterday.

To recap, KKB announced in September 2015 that it had been awarded the Talisman EPC contract as well as a tender award from Sarawak Sesco Bhd for the annual supply and delivery of steel products.

This is followed by a letter of award from Sarawak Energy Bhd (SEB) for the supply, delivery, erection, commissioning of one unit of 1,000 tonne fuel storage tank inclusive of pipings and fittings for the Lawas Power Station worth a combined total of RM171.1 million.

The Talisman EPC job is scheduled for completion by the second quarter of 2017 (2Q17) and for Sesco was scheduled within 3Q16 and SEB within 1Q16.

Additionally, KKB announced in 4Q15 that the group had been awarded two contracts worth a combined value of approximately RM31.8 million.

On Dec 21, 2015, KKB said that the awards were for the fabrication and supply of steel pipes and specials from Batu Kitang water treatment plant to Bukit Entingan tank in Kuching and purchase order from Petron Malaysia Refining & Marketing Bhd (Petron) for fabrication, supply and delivery of new Petron cylinders.

The completion dates were scheduled within 3Q16 and for Petron within 4Q16 respectively.

Kho believed contribution from those jobs are expected to improve the company’s financial results in the subsequent quarters of this year.

In the meantime, Kho indicated that the group’s tender book stood at approximately RM514 million as at end of 1Q16.

The tender book comprises RM144 million for jobs under engineering and manufacturing as well as RM370 million under O&G held under its 43 per cent associate OceanMight Sdn Bhd.

On a separate note, he revealed that KKB is bidding for one of the remaining eight packages of the Pan Borneo Highway Sarawak together with its joint venture partner WCT Holdings Bhd.

“KKB remains selective in its contract bidding and is open to and shall explore opportunities to participate in areas where its expertise are sought, some related to the Pan Borneo Highway in the future.

“We would be keen to explore the opportunities for the supply of related materials for the Pan Borneo Highway Sabah as well,” he opined.

Kho stressed that KKB will continue to be prudent in managing its cost and selective in its project tender to remain competitive and resilient in view of the challenging times ahead.

As at end of 1Q16, KKB’s balance sheet remains strong and had a net cash of RM139 million.

At the same time, a first and final single tier dividend of four sen per share of 50 sen each was approved at the company’s AGM and to be paid to shareholders in June 2016.

 

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