George Kent’s prospects clouded by pandemic-inspired lockdown


GEORGE Kent (M) Bhd’s (GKent) near-term prospects are hampered by the total lockdown and workforce constraints.

Hong Leong Investment Bank Bhd (HLIB), in a note yesterday, noted that GKent’s construction segment expects to see better job prospects, but rollout has been shackled by Covid-19 pandemic resurgence in 2021.

HLIB analyst Jeremy Goh stated GKent is participating in various tenders in water- and hospital- related jobs in the price range of RM150million-RM400 million, as well as Sarawak water treatment plant worth a combined RM1 billion.

“GKent recently pre-qualified for Package 3 Rasau Water Scheme comprising design and build of boosters and reservoir in Kajang (estimated RM500 million). We are not too sanguine on GKent’s prospects due to stiffer competition as anaemic job flows in the past have resulted in job hungry contractors. Not to mention volatile increases in materials cost has made tender costing trickier,” noted Goh.

He added that under the new lockdown standard operating procedures (SOPs), GKent’s works have achieved 80% completion for its hospital projects and the Light Rail Transit Line 3 (LRT3) project.

“Productivity should fall further from SOPs and labour shortages. Complicating things further are the steel and cement industries which will be operating on ‘warm idle’ during this period. Should the current scenario be prolonged beyond two weeks, we foresee supply chain issues for construction. As for its metering segment, operations will be capped at 60%,” Goh stated.

GKent recently lost out on track works tender for the Johor Baru-Singapore Rapid Transit System.

As for the Mass Rapid Transit Line 3 project, there are no developments on its systems (GKent’s arena) for the moment, but progress elsewhere should inevitably lead to developments of the systems as well, Goh stated.

HLIB estimates GKent’s outstanding orderbook for both hospital projects to be at RM64 million as of the end of March 2021, while its LRT3 orderbook (joint venture (JV)-accounted) is at RM2.9 billion.

“Both hospital projects should be on course for completion in June and September 2021. Additionally, should the glove JV go ahead, GKent will be awarded a RM613 million RPT (related party transaction) contract, of which RM213 million is civil or infra nature,” added Goh.

On the LRT3 progress, HLIB said it has achieved an overall completion rate of 51% coming in slightly behind schedule up until March 21.

“While the project is slated for completion in early 2024, the company may request for pandemic-induced extension of time which would delay completion to end-2024,” said Goh.


Tuesday, August 11, 2020

Construction sector still cautious

Wednesday, March 10, 2021

LRT3 project still on Prasarana radar