MARC Ratings has affirmed its MARC-1IS and A+IS ratings on George Kent (Malaysia) Berhad’s RM100.0 million Islamic Commercial Papers (ICP) and RM500.0 million Islamic Medium-Term Notes (IMTN), which have a combined programme limit of RM500.0 million. The long-term rating outlook is stable. As of end-May 2025, RM132.0 million was outstanding under the IMTN, while there were no outstanding ICPs.
The affirmed ratings reflect George Kent’s strong liquidity position and healthy balance sheet, while also considering the exposure of its construction business to unpredictable contract flows, as well as the softening performance of its metering segment.
George Kent holds a well-established position within the water meter sector, underpinned by more than 80 years of operations. Despite the segment consistently generating over RM120 million in revenue, performance has moderated in recent years. In the fiscal year ended 31 March 2025 (FY2025), sales volume declined by 13.3%, a moderation from the sharper 24.5% drop recorded in the previous year. Nevertheless, flexible and strategic pricing strategies helped cushion revenue decline; revenue fell by 5.8% to RM124.3 million from RM131.8 million. In addition to effective cost management and a favourable exchange rate environment during the period, these measures helped sustain the segment’s profit margin, which remained stable y-o-y at 15.5%, though still below its historical high of over 20%. The company continues to pursue growth initiatives, notably its international expansion efforts, with the recently established subsidiary in Vietnam expected to serve as a key driver of future growth.
Meanwhile, the construction segment saw a modest revenue increase to RM13.7 million in FY2025 (from RM2.6 million in FY2024), supported by early-stage contributions from two new projects with a combined worth of RM72.2 million. As of end-April 2025, the order book stood at around RM70.0 million, with revenue expected to flow through the current and next fiscal years. George Kent is actively bidding for new projects, all of which are pending approval.
Total debt declined slightly to RM203.1 million as of end-March 2025, with the debt-to-equity ratio stable at 0.41x. Since its last mergers and acquisitions (M&A) activity in 2021, George Kent has undertaken no new deals. While the ratings allow some M&A flexibility, any future transactions are expected to be value accretive. Liquidity remains strong, backed by cash balance of RM245.7 million as of end-March 2025, resulting in a net cash position. The RM132.0 million IMTN maturing on 25 March 2026 is expected to be refinanced under the existing programme.