THE BUZZ
KimLun announced that it has secured a RM48.5m contract from MMC-Gamuda for the manufacture, supply and delivery of precast concrete tunnel lining segment (TLS) to the Klang Valley My Rapid Transit Sungai Buloh-Kajang (SBK) line. Works are expected to be completed within 24 months.
OUR TAKE
Secures RM794m worth of new jobs in 1HFY12. The announcement is within our expectation although the quantum is below our previous guidance. We believe this is mainly due to the fact that the TLS segment of the underground section of SBK line, which we understand is worth some RM150m, has been split into 2 or 3 packages to benefit more local contractors with similar capabilities. That said, KimLun’s sturdy jobs flow is expected to continue, having secured RM794m worth of new jobs YTD with its outstanding orderbook now at RM1.75bn. Assuming a quarterly burn rate of RM200m-RM250m, the company’s outstanding orderbook of RM1.75bn should last it well into 2HFY13.
More news from Singapore in 2HFY12. Going into 2HFY12, we expect to more news in relation to its operations in Singapore as management has indicated that the 35km underground power transmission cable job comprising two tunnels is likely to be awarded by end-2012. As we have yet to factor this into our forecasts, a further upgrade to our numbers is likely if this materializes.
BUY. To factor in this latest contract win, we are revising our FY13 net profit forecast 2.5% higher to RM62.6m. Our FY12 numbers are largely unchanged as we expect the contribution from this contract to kick in only by 1QFY13. Maintain BUY, with our FV unchanged at RM2.37, based on 12x FY12 PER. KimLun continues to be one of the best small cap proxies to the construction sector given its strong execution track record and sturdy contract wins YTD.
Source: OSK
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