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3rd Quarter 2016 Group revenue of RM27.6 million rose 232.5% in comparison to RM8.3 million registered in the preceding year corresponding third quarter, mainly due to higher revenue registered by both the Engineering & Manufacturing Sectors.
The increase sales along side the improve gross profit margin registered by the Group's steel pipes manufacturing business have contributed to the improved bottom line, thereby reducing the Group's pre-tax loss to RM183K against RM4.8 million registered in 3Q15.
The newly awarded project for the development and upgrading of the Proposed Pan Borneo Highway in the State of Sarawak (Phase 1 Works Package Contract - WPC-09) commenced during the 3rd Quarter 2016 is still at the preliminary stage to have any significant contribution to the Group's earnings.Engineering Sector
The Engineering Sector registered revenue of RM21.8 million as compared to RM5.8 million in the preceding year corresponding third quarter.
The Steel Fabrication Division mainly contributed the Sector's revenue for 3rd Quarter 2016, registered RM20.8 million in revenue against RM4.8 million in 3Q15, representing an increase of 333.3% over the preceding year corresponding third quarter. Current quarter's revenue were mainly derived from the on-going fabrication works involving the supply of Low/High Tension Steel Poles, supply of fabricated steel structures for Tank 7 New Jetty-PAF Projects for Petronas LNG Train 9 project, subcontract works for the fabrication of Wellhead Platforms and other miscellaneous fabrication works.
HDG Division's sales of RM971K (3Q15: RM931K) for the quarter remained fairly consistent with the preceding year corresponding quarter, mainly contributed from the supply of Hot-Dip Galvanised Steel Poles.Manufacturing Sector
At Group level, the Sector's revenue reached RM5.9 million (3Q15: RM2.5 million), an increase of 136.0% compared to 3Q15, mainly attributed by higher sales from both the Steel Pipes and LPG cylinders manufacturing divisions.
Revenue of LPG Cylinders manufacturing division for the current quarter shows an increase of 60.0%, mainly due to a higher offtake of LPG cylinders as compared to the preceding year 3rd quarter. 3Q16 revenue of RM2.4 million (3Q15: RM1.5 million) was for the supply of LPG cylinders to Petron Malaysia Refining & Marketing Bhd (formerly known as Esso Malaysia Bhd) and for requalification works of LPG cylinders to Mygaz Sdn Bhd. The Group's Steel Pipes manufacturing plant in Kuching, Sarawak and Kota Kinabalu, Sabah under the two subsidiary companies, Harum Bidang Sdn Bhd and KKB Industries (Sabah) Sdn Bhd saw an increase of 249.8% in revenue. The supply of MSCL Pipes and Special to CMS Infra Trading Sdn Bhd and other ad-hoc customers in Kota Kinabalu, Sabah has enabled the Group to register RM3.4 million revenue in 3Q16 against 3Q15 revenue of RM972K.
The Group's performance continues to be challenging on the back of prolonged uncertainties in the global economy and weakening oil prices.
The Group is continuously pursuing various engineering projects, particularly projects related to the basic social-infrastructure works for Steel Fabrication, Water Supply and related infrastructure projects that are planned to be implemented throughout Sarawak and Sabah.
In addition, the Group is actively participating in potential business opportunities in the Major Onshore Fabrication to move up the value chain in Fabrication Engineering and related disciplines, in collaboration with its associate Company i.e OceanMight Sdn Bhd and other strategic partner(s).
The continued uncertainties in the global economy, escalation of costs due to inflationary pressure, volatility of global raw material steel prices and the fluctuation of exchange rates are amongst factors that may impact the Group's performance.