Contract flows picking
up momentum. The announcement
came in as a positive surprise to us, with KimLun’s YTD jobs secured
standing tall at RM445m. As we step into 2QCY12, KimLun has already exceeded
our expectations by achieving 74.2% of our orderbook replenishment forecast of
RM600m p.a. for both FY12 and FY13. Nonetheless, we make no changes to our
assumptions for now, although there is a potential upside bias should the group
secure the supply of tunnel lining segment for the KV MRT SBK line as well as
some possible job flows from the Singapore MRT on new line expansions.
Keep an eye out for
tunnel lining segment. Earlier last month, KimLun entered into a sale and
purchase agreement to acquire a parcel of industrial land in Seremban for RM15.5m
to construct a new precast plant. This
expansion will prime the company for potentially securing some tunnel lining
segment contracts in the underground portion of the MRT SBK line. We expect its
share price to continue to trend upwards, pending the official award of the
tunneling portion of the said line by MRT Corp come April this year. We
understand that the Gamuda-MMC JV, which
we believe is likely to
snag the tunneling portion, had
visited KimLun’s existing precast plants to conduct quality control checks.
Over the medium term, we expect to hear more from the Iskandar region while in
the long run, we believe KimLun will likely gain a stronger foothold in
Singapore, as we understand that a 35km underground cable tunnel is likely to
be awarded this year, with the 50km Thompson Easter Region line also in the
pipeline.
BUY. Maintain our
BUY call at an unchanged FV of RM2.07 based on 10x FY12 PER. We continue to
like KimLun given its strong execution track record, sturdy job wins YTD, as
well as its increasing presence in the Johor and Singapore region. Thus, we
view it as the best small cap proxy for Malaysia’s construction sector.
Source: OSK188
No comments:
Post a Comment