Thursday 8 March 2012

Kimlun Corporation - OUTPERFORM - 7 Mar 2012


Kimlun has been awarded a contract for the construction of apartments and ancillary buildings in Johor Bahru. The project is owned by Dynasty View SB, which is part of United Malayan Land. We are keeping our earnings forecasts unchanged as the contract is part of its RM550m annual order book replenishment, which we have already factored into our forecast. Given the potential upside of 26% and the likelihood of it securing a supply contract for the TLS, we are maintaining our Outperform rating on Kimlun with an unchanged target price of RM1.93. This is based on 8.0x PER on its FY12 forecast EPS. 

Award for the construction of apartments and ancillary buildings in Johor.  It was announced yesterday that Kimlun has been awarded the construction of apartments and ancillary buildings in Johor Bahru for a total contract sum of RM68.3m, which it expects to complete by December 2014. The project is by Dynasty View SB, which is a subsidiary of United Malayan Land. The contract value is part of the company’s RM550m annual order book replenishment, which has already been imputed in our estimates.  As at year to date, the company’s current outstanding order book is RM1.5b.

No change to our FY12-13E earnings forecasts of RM55.4m-RM61.0m. We have already factored in a RM550m annual order book replenishment in our estimates and we are maintaining our FY12 and Y13 earnings forecasts at this juncture. 

Maintain Outperform. Looking at 26% potential upside from the current price, we reiterate our Outperform recommendation with unchanged target price at RM1.93, based on 8x PER of its FY12 EPS of 24.2 sen.

Source: Kenanga

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