RM1.33 Share Price Backed by 86 sen Net Cash per Share
Publish date: Mon, 31 Mar 2014, 09:07 AM
On 27 March 2014, George Kent ("G Kent") announced latest quarter net profit of RM18 mil, equivalent to EPS of 8.1 sen.
For the full year ended January 2014, they reported net profit of RM36 mil, EPS of 16 sen.
In response to the above, share price jumped by 11 sen to RM1.33.
What exactly does G Kent do ? Is it still worth investing at current price ?
(1) Background info on G Kent
The principal business of G Kent is as follows :-
(a) manufacturing and sale of water industry related brass products (pipes, valves, fittings, etc)
(b) construction; and
(c) infrastructure investment.
With 225 mil shares outstanding and share price of RM1.33, market cap is RM300 mil.
Very strong balance sheet. As at January 2014, the gorup has net assets of RM247 mil, loans of RM17 mil and cash of RM211 mil. This translatest into net cash of 86 sen per share.
Based on EPS of 16 sen and share price of RM1.33, PER is 8.3 times.
(2) Consistent Profit Track Record
Historical profitability of G kent is as set out below :-
(3) Manufacturing Division
G Kent's manufacturing complex is located on 17 acres of land in Puchong. It is the largest hot brass forging facility in South East Asia. It manufactures brass valves, fittings, water meters, etc.
The group manufactures more than 2 million units of water meters annually. Apart from domestic market, the group also exports to more than 20 countries.
Did well recently in Vietnam, Cambodia and Laos. Contemplating setting up manufacturing presence there.
(4) Construction Diviision
(Ampang LRT Extension)
In July 2012, G Kent consortium was awarded a RM1.08 billion contract for 17 km Ampang LRT extension.
The contract involved engineering, procurement and construction, commissioning of signalling system, track work, electrification, etc.
Contract period of 44 months starting from July 2012 until March 2016.
Based on back of envelope calculation, as at January 2014, the contract is 40% completed. The remaining 60%, equivalent to RM650 mil, will be booked in over the next 26 months.
Please note that the value of the contract does not accrue entirely to G Kent. The contract was secured by G Kent together with another party (Lion Pacific). Information of G Kent's stake in the consortium is not available.
(Water Treatment Related Projects)
Based on information available from G Kent's website, the following is typical water related projects undertaken by G Kent over the years :-
(5) Infrastructure Division
19% stake in water treatment plant in Papua New Guinea supplying water to Port Morseby.
Consistently delivered operating profit of about RM18 mil per annum.
The concession expiring in 2019.
(6) Conclusion
(a) Strong balance sheet, in net cash position. Augurs well for future dividend payment.
(b) consistent profit track record over past five years. Recent years earnings boosted by construction division
(c) should benefit from government capex pursuant to water industry restructuring.
As usual, no harm keeping the stock in watchlist
Have a nice day
For the full year ended January 2014, they reported net profit of RM36 mil, EPS of 16 sen.
In response to the above, share price jumped by 11 sen to RM1.33.
What exactly does G Kent do ? Is it still worth investing at current price ?
(1) Background info on G Kent
The principal business of G Kent is as follows :-
(a) manufacturing and sale of water industry related brass products (pipes, valves, fittings, etc)
(b) construction; and
(c) infrastructure investment.
With 225 mil shares outstanding and share price of RM1.33, market cap is RM300 mil.
Very strong balance sheet. As at January 2014, the gorup has net assets of RM247 mil, loans of RM17 mil and cash of RM211 mil. This translatest into net cash of 86 sen per share.
Based on EPS of 16 sen and share price of RM1.33, PER is 8.3 times.
(2) Consistent Profit Track Record
Historical profitability of G kent is as set out below :-
| FYE 31 Jan (RM mil) | 2010 | 2011 | 2012 | 2013 | 2014 |
| Revenue | 125 | 165 | 152 | 277 | 506 |
| PBT | 26 | 33 | 26 | 36 | 51 |
| PAT | 20 | 25 | 20 | 26 | 36 |
| DPS (sen) | 4 | 5 | 5 | 6.5 | 7.5 |
| Dividend yield (RM1.33) | 3% | 3.8% | 3.8% | 4.9% | 5.6% |
| (Revenue Breakdown) | |||||
| Manufacturing (water related) | n/a | n/a | n/a | 127 | 116 |
| Construction | n/a | n/a | n/a | 132 | 373 |
| Infrastructure | n/a | n/a | n/a | 18 | 18 |
| (Profit Breakdown) | |||||
| Manufacturing (water related) | n/a | n/a | n/a | 15 | 18 |
| Construction | n/a | n/a | n/a | 17 | 35 |
| Infrastructure | n/a | n/a | n/a | 12 | 10 |
(3) Manufacturing Division
G Kent's manufacturing complex is located on 17 acres of land in Puchong. It is the largest hot brass forging facility in South East Asia. It manufactures brass valves, fittings, water meters, etc.
The group manufactures more than 2 million units of water meters annually. Apart from domestic market, the group also exports to more than 20 countries.
Did well recently in Vietnam, Cambodia and Laos. Contemplating setting up manufacturing presence there.
(4) Construction Diviision
(Ampang LRT Extension)
In July 2012, G Kent consortium was awarded a RM1.08 billion contract for 17 km Ampang LRT extension.
The contract involved engineering, procurement and construction, commissioning of signalling system, track work, electrification, etc.
Contract period of 44 months starting from July 2012 until March 2016.
Based on back of envelope calculation, as at January 2014, the contract is 40% completed. The remaining 60%, equivalent to RM650 mil, will be booked in over the next 26 months.
Please note that the value of the contract does not accrue entirely to G Kent. The contract was secured by G Kent together with another party (Lion Pacific). Information of G Kent's stake in the consortium is not available.
(Water Treatment Related Projects)
Based on information available from G Kent's website, the following is typical water related projects undertaken by G Kent over the years :-
| Project Details | ||
| Seberang Tayor Water Treatment | installation of electric pumps, piping, instrument, etc | |
| Sungai Ahning dam | - steel intake and diversion gates - M&E plant and equipment - various valves - instrumentation | |
| Sungai Dua Pumping Station | raw water and treated water pumpsets | |
| Sungai Layang Water Treatment Works, Johor | operation and maintenance of 181 MLD water treatment works and associated dams, pipelines, reservoirs | |
| another 20 water and sewerage related projects | please refer to www.georgekent.net |
(5) Infrastructure Division
19% stake in water treatment plant in Papua New Guinea supplying water to Port Morseby.
Consistently delivered operating profit of about RM18 mil per annum.
The concession expiring in 2019.
(6) Conclusion
(a) Strong balance sheet, in net cash position. Augurs well for future dividend payment.
(b) consistent profit track record over past five years. Recent years earnings boosted by construction division
(c) should benefit from government capex pursuant to water industry restructuring.
As usual, no harm keeping the stock in watchlist
Have a nice day
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