Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

Tuesday, December 16, 2014

George Kent: Another Stable Quarter

With the recent red sea market, I guess there is not much people having the mood to read quarter report release. Well, my thinking is that instead of looking at the stock price frequently, why not take a book/course to upgrade yourself or look through the companies to find any potential gems since the price now is getting more attractive unless you want to buy/sell your counters. 

Okay, back to the post. George Kent always in my watch list and gone through ups & downs in terms of stock price throughout the past few months. The group just released its Q3FY2015 report yesterday. 

Higher revenue but flat net profit if compare to corresponding quarter last year. This was due to higher contribution from its construction segment that fetched far lower profit margin. 

EPS was diluted due to the bonus issue of 1-3 that just completed months ago. 

For the cumulative 9 months period, the group net profit increased from RM17.7 mils to RM19.8 mils, which showed around 11.8% improvement. 

In terms of dividend, the group so far announced 3.2 cents dividend compared to 3.0 cents last year (Ex-bonus issue). Thus, in terms of dividend in dollar, it was almost 42% increases!

What surprised me is that its manufacturing segment had showed a drop in performance. I expect this segment will keep on improving since it mentioned that they had secures new contracts from Vietnam and Singapore for their meter products. 

The management also failed to explain the reason behind this performance drop in quarter report and press release. I dropped an email to their IR and hopefully they will reply me soon. 

For its construction segment, there is steady contribution from its Ampang LRT line extension project. As far as I know, the group's current construction order book is only left the Ampang LRT line extension job and the newly awarded Kuala Lipis Hospital projects but the group only recognised 1/3 of the Ampang LRT line RM1.08 bil project. So, it's still okay for me at this moment. 

For its balance sheet, nothing much special to mention other than the increases in trade receivables and trade payables. Will monitor on next quarters. 

So, another stable quarter for me. But with the recent drop in crude oil price, it's directly affected our government's budget and expenditures and so does the construction job orders. 

Hopefully a better meter manufacturing performance and a good dividend payout ( Currently DY >5% )

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