KKB eyes more jobs as earnings remain resilient

Kho (left) is seen speaking to the press with KKB’s group chief financial officer Bibiana Diwek Dayus.

KUCHING: KKB Engineering Bhd (KKB) aims to focus on key areas of its business such as its engineering and manufacturing as well as oil and gas (O&G) sectors to remain resilient amidst the current challenging environment.

It also looks to expand its business into the power and energy sector as it believes Sarawak holds great potential in the industry.

This came on the back of KKB’s 2016 performance in the face of a challenging year due to increasing cost of materials, and exposure to fluctuations in foreign exchange.

For 2017, KKB is cautiously optimistic on its prospects but also pointed out that the situation should be same for most companies.

“We feel that our business is robust despite the challenging environment. More importantly, our balance sheet is still very conservative with a cash net position of RM120 million as at March 31, 2017. Our net gearing is also at a minimal level.

“We want to balance ourselves between being cash flow positive and cost prudent as well conservative towards the usage of our capital expenditure (capex),” said KKB group executive director Kho Pok Tong at a press briefing following the group’s Annual General Meeting yesterday.

“We want to focus on our tradition business which we have been doing well, and also on our new O&G business which we will strengthen and continue.

“For KKB, the new O&G unit is an area of new expansion. KKB is also relentlessly bidding for new tenders to replenish its order book and boost its future earnings.”

As of March 31, 2017, Kho noted that the combined tender book for KKB’s E&M business is worth about RM42.4 million while for its O&G unit, OceanMight Sdn Bhd (OMSB), tender book totals at around RM314 million.

The group’s orderbook also reached a historical high of RM1.308 billion which include the Pan Borneo Highway project (WPC-09) which KKB is involved in through its joint venture with WCT Bhd.

On this note, Kho pointed out that KKB had recently signed a memorandum of understanding (MoU) with a China-based State Nuclear Electric Power Planning Design and Research Institute Co Ltd (SNPDRI) to explore business opportunities and pre-qualify to participate in tenders for projects in Sarawak.

“Sarawak has huge potential in terms of harnessing energy and generating power. With this partnership through this MoU, KKB is exploring opportunities where it could work together with the state of Sarawak to service the power and energy sector here.”

Meanwhile, he also remarked that KKB is continuously looking to supply to contractors and companies working on the Pan Borneo Highway project.

KKB is one of few steel pipe manufacturers in Malaysia. It has three production facilities across East Malaysia and a group production capacity of 45,000 metric tonne per annum.

“This makes it capable of handling the massive Pan Borneo Highway across Sabah and Sarawak. We are eager to participate in this project. Logistics-wise and supply-wise, we are ready to meet this demand.

“There are 11 packages for the Pan Borneo Highway and aside from the package our JV is working on, we are also looking to supply our water pipes and tubular piles to companies and contractors working on the other packages across the project,” Kho noted.

On the O&G business, KKB noted that for the last few years, the sector faced a lot of obstacles.

However, KKB assured that the group’s projects in the O&G sector, via OMSB, is moving forward. To note, KKB is currently working on two engineering, procurement and construction (EPC) contracts from Spanish oil company Repsol Oil and Gas Malaysia Ltd (Repsol).

Kho also announced yesterday that OMSB had successfully completed the construction of the jacket and it would be loading the jacket onto the cargo barge for transportation and installation at the offshore site.

“We have invested very conservatively over the last five years to get our yards and facilities ready. By completing these two contracts successfully, we expect to fulfil our contractual obligation by 3Q17,” he added.

OMSB is one of seven major Petronas licensed fabricators in Malaysia.

Meanwhile, KKB announced that the board has approved a RM20 million capital expenditure (capex) for the group for 2017 to improve the group’s competitive stance in bidding for new jobs.

With the installation of the new state government, Kho said, KKB looks forward to the programmes that the government has for the industry.

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