- We maintain BUY on KKB Engineering, with a fair value of RM1.80/share
based on a 10% discount to a sum-of-parts value of RM2.00/share.
- The Star reported today that KKB is one of the
frontrunners for the job of constructing Asia Minerals Ltd's (AML) RM790mil
manganese ferro alloy smelting plant in Samalaju Industrial Park, Bintulu.
- The contract is expected to be awarded in the next two to three months. KKB executive director
Kho Pok Tong confirmed that the company had tendered for the construction package
of the AML smelting plant.
- He said the bid, comprising 60% engineering and 40% manufacturing
jobs, was among the tenders worth RM320mil that KKB had submitted as of 31
March 2012. The results would be known in the second half of the year.
- According to the report, AML chairman Hirotaka Suzuki said
the smelter project would be implemented in two phases, with the first targeted
for commercial production by July next year and phase II to be operational by
end-2014.
- Kho also said KKB had been pre-qualified for the
construction job of OM Materials (Sarawak) Sdn Bhd's (OM Sarawak) US$500mil
manganese and ferrosilicon alloy smelting facilities in Samalaju Industrial
Park and some packages of Petronas Chemicals Group Bhd's US$1.5bil Sabah
ammonia urea (SAMUR) project.
- Meanwhile, KKB yesterday also announced that its MoU with Brooke
Dockyard has been extended for another six months for more discussions on the
terms and conditions of their collaboration.
- Through the collaboration, KKB is planning to diversify
into fabrication of jacket and other structures for the offshore oil and gas
industry, and marine sector. Kho said the two parties had identified certain
projects in the oil and gas industry for their collaboration.
- We maintain our order book assumption of RM300mil for FY12F
and of RM380mil each for FY13F and FY14F. KKB on Wednesday released its 1QFY12
results that were below expectations.
- Nonetheless, we maintain our BUY for KKB for: 1) its
potential engineering and construction jobs within Samalaju; 2) its water pipes supply for the rural water
projects; and 3) decent dividend yield of 6%.
Source: AmeSecurities
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