News Kimlun
announced that MMC-Gamuda KVMRT (T) S/B accepted its offer to manufacture, supply and deliver precast
concrete tunnel lining segments (TLS) for the Sg. Buloh – Kajang MRT line for
RM48m.
Comments We are
neutral on this news as the contract award has already been factored in as part
of our additional order book replenishment assumption of RM200m for FY12. The
delivery of TLS will take place in 1Q13 when the initial MRT tunnelling work
starts operation. This timeline is also in line with the completion of Kimlun’s
new plant in Seremban for precast production.
This is the second
contract award related to the KVMRT works for Kimlun. To recap, the first
contract was secured in Feb 2011 for the supply of segmental box for MRT’s
elevated works worth a contract value of RM223m.
We expect the gross
margin for the project to hover around 20%, which would be in line with our
margin assumption for its manufacturing division.
Outlook For the year to date, Kimlun has successfully
secured several projects in Johor and Klang Valley with a combined value of
RM800m in FY12.
Its current order
book, which stands at c. RM1.7b, will last for another two years. We
believe that Kimlun is eyeing more building projects in Johor and Klang Valley.
With its expertise in building precast, this will benefit them to secure government-related
project and high-rise residential projects which require a 70% usage of IBS components.
Forecast No changes to our earnings forecasts.
Rating Maintain
OUTPERFORM
There is an
attractive upside of 20% to our Target Price of RM1.77.
Valuation We
maintain our TP of RM1.77 based on 8x PER on its FY13E EPS of 24.7sen.
Risks Delays in executions and higher-than-expected building
material prices.
Source: Kenanga
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