KIMLUN Corporation Bhd reported higher year to date construction contracts secured, which came as a surprise, according to RHB Investment Bank, who views this development positively.
“Year to date construction contracts secured of RM420 mil surprised on the upside. Management raised its guidance for construction contracts replenishment for FY20F to RM500 mil to RM600 mil.”
“Similarly on the precast manufacturing front, year to date manufacturing contracts were secured that were valued at RM200 mil, surpassing Kimlun’s earlier guidance of RM120 mil to RM150 mil,” said RHB.
The research house noted that this upside was due to some shift in preferences to carry out off-site casting instead of doing this on-site to adhere to the Covid-19 standard operating procedure requirements.
“Despite that, management only raised its target to RM230 mil, guiding that the majority of contracts expected to be secured in the year were already in the bag,” said RHB.
RHB also noted that Kimlun is again eyeing more projects in Sarawak, in view of the slower property project pipeline.
The research house believes potential project replenishment could come from the extension of the Pan Borneo Highway (Sarawak), as well as the Sarawak Coastal highway.
“The company also participated in the tender for building extension works for University Malaya, and the Central Spine Road. On the Johor Bahru-Singapore Rapid Transit System (RTS) project, it has expressed interest to supply precast components as well as participate in civil works,” said RHB.
RHB upgraded its call for Kimlun from neutral to buy, with a higher target price of 93 sen from a previous 80 sen.
At 12.15pm, Kimlun’s shares were last done at 79 sen, up 1.5 sen, with 600,800 shares traded. – Sep 1, 2020
