George Kent (3204) - Q3FY2020 deep dive into their quarterly report
- Consensus Target Price ：RM0.97
- Consensus Rating：HOLD
- P/E 9.87 ，PTBV 1.01
- Dividend Yield：6.45%
This company is engaged in Engineering and Water Metering but because their
boss Tan Sri Dato ’Tan Kay Hock and his former chief are in close relationship
with Najib (rumoured to be his golf kaki). After the Malaysian election, the
stock price went from a high of RM 3.94 limit down twice and it fell all the way
till today 0.93 sens.
LRT 3 has been slowing down their progress although the lRT 3 price has been
finalized at 11.3 billion however their profit still dropped by 50.1% in Q3 2020.
This is due to pending negotiations with subcontractors and with fewer job
opportunities and increased competition, management indicated that they will
focus more on water metering business.
Financials – Income Statement
Revenue wise for their Q3 2020 decreased by about 30% from 103.55 million
to 72.91 million, this is mainly due to the “dramatic” slowing down of project
acquisitions and also cost reduction in their LRT 3 total cost.
The Group's profit before tax for the period ended 31 October 2019 is
RM46.32 million as compared to their PBT for their 31 October 2018 was
RM90.26 million which was 49% lower.
The lower profit before tax was mainly attributed to lower contribution from
the Engineering division. Other gains/(losses) mainly arose from unrealised
gain on foreign exchange of RM0.73 million on 31 October 2019 compare to
RM7.32 million on their 31 October 2018 report on foreign currencies held.
- Revenue -29.58%
- Profit Before Tax -48.68%
EngineeringRevenue of RM39.87 million for the current quarter ended 31 October 2019
was 39% lower as compared to RM65.13 million for the corresponding quarter
in 2018. Engineering segmented profit is RM8.87 million for the current
quarter ended 31 October 2019 was 64% lower as compared to RM24.83
million for the corresponding quarter in 2018. The lower segment profit was
mainly contributed by the lower revenue and gross profit margin in the current
quarter.
MeteringThe Group signed a long-term license agreement with Honeywell on 28 June
2019 to manufacture high-precision water meter measuring components and
exclusively sell these water meters to 26 territories, including 15 new
territories in the Asian region.
exclusively sell these water meters to 26 territories, including 15 new
territories in the Asian region.
Revenue of RM33.04 million for the current quarter ended 31 October 2019
was 14% lower compared to RM38.42 million for the corresponding quarter in
2018.
Their metering segmented profit is RM5.97 million for the current quarter
ended 31 October 2019 was 41% lower as compared to RM10.19 million for the
corresponding quarter in 2018, this is mainly due to the lower sales and gross
profit margin in the current quarter.
Financials – Balance SheetTheir Q3 2020 report their total assets fell from 797 million in 31 Jan 2019 to
748.98 million in 31 Oct 2019. What we need to know from this is that their
Deposits, cash and bank balances decreased from 264 million to 217 million
which ultimately decreased their total assets.
Total assets -6.03%
Deposits, cash and bank balances -17.76%
But first we need to see why their cash and bank balances decreased, we will
dive deeper on their cashflow statement on what are they using their money
for. But as for their liabilities and equity wise I think you will be happy to hear
that their liabilities also decreased and not just a little but by a marginable
amount compared to their assets which is what we want to see.
Total Liabilities -18.11% from 311.48 million to 255 million
Total Equity 1.7% from 485.63 million to 493.93 million
Gkent also has higher retained earnings but this is also due to the fact that
they are giving lesser in dividend.
Financials – Cashflow statementAs you can guess cash from operating activities also decreased from 65.1
million in 31 October 2018 to 45.6 million in 31 October 2019 was mainly due
to the unrealised gain on foreign exchange.
Meanwhile their net cash used in operating activities also decreased
tremendously from 184.4 million to 37.5 million in the current FY.
Now for their cash and cash equivalents, I would say that they are still on the
“green side” for their cash as they are still a net cash company although their
cash also dropped but that is to be expected judging from their revenue and
profits of course their cash will be decreased as well.
Total cash and cash equivalents for the FY 2019 is 215.5 million compared to
their cash on the previous 31 October 2018 which is 260.4 million
Cash from operating activities -29.89%
Cash and cash equivalents -17.23%
DividendsDirectors have declared a second dividend of 1.0 sen per share for FY2020
(FY2019: 1.5 sen per share) which will be issued out on 5th February 2020 to
all shareholders with an EX date of 9 January 2020.
Share buybackGKENT held their 68th AGM on the 9th July 2019, Share Buy-Back scheme was
approved by shareholders for the renewal from 9 July 2019 until the conclusion
of the next AGM of the Company to be conducted in 2020.
As of October 2019, GKENT has repurchased a total of around RM25,107,900
shares from the open of the market and a total of around RM26,650,113 as of
current. A total of 1,015,000 shares were repurchased from the open of the
market which is a total of RM986,832 cash used for share buyback.
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#LRT3
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All the views and opinions expressed in our post are for education and informational purposes only and it should not be considered as professional financial investment advice or buy/sell recommendations. We strongly encourage you to do your own research and take independent financial advice from a professional before you proceed to invest.
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#CONSTRUCTION
#LRT3
#WATERMETERING
#12INVEST
Disclaimer:
All the views and opinions expressed in our post are for education and informational purposes only and it should not be considered as professional financial investment advice or buy/sell recommendations. We strongly encourage you to do your own research and take independent financial advice from a professional before you proceed to invest.
We make no representations as to the accuracy, completeness, correctness, suitability, or validity of any information on our Facebook Page/Group and will not be liable for any errors, omissions, or delay in this information or any losses and damages arising from its display or usage. All users should read the posts and analyze the information at their own risk and we shall not be held liable for any losses and damages.
