AmResearch: Kimlun set to benefit from more Iskandar jobs

AmResearch: Kimlun set to benefit from more Iskandar jobs
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Wednesday, 19 June 2013 13:41

KUALA LUMPUR (June 19): AmResearch believes Kimlun Corp Bhd is set to benefit from more CONSTRUCTION [] jobs in Iskandar Malaysia.
The research house today raised its fair value on Kimlun to RM3.28 from RM2.36, with a “buy” rating maintained.

At noon break, the engineering and construction player lost four sen or 1.69% to RM2.32. A total of 258,200 shares were traded.

In a note today, AmResearch said Kimlun’s potential manufacturing jobs include: i) Thomson MRT line in Singapore; (ii) Underground power cable tunnel project; (iii) KVMRT Line 2 and iv) other proposed extension works of MRT network in Singapore, namely Eastern Region line and North East line extension.

“Kimlun is fast emerging as an attractive, albeit cheaper, proxy to the surge in construction works in Iskandar Malaysia.

“This aside, the group also provides a direct exposure to the development of MRT lines in Malaysia and Singapore; it supplies segmental box girders (SBG) and tunnel lining segments (TLS),” said AmResearch in the note.

The research house also revealed that Kimlun had a construction order book of RM1.2 billion as at last December.

“We expect new orders to grow from RM650 million in FY13F, to RM900 million in FY14F and rising further to RM1.1 billion in FY15F,” AmResearch added.

As for Kimlun’s manufacturing order book, the research house said it currently stands at RM300 million and is boosted mainly by KVMRT Line 1 job.

“Balance sheet remains healthy with net gearing of 56%. We expect net dividend per share of five sen (23% payout ratio) for FY13F, indicating a gross dividend yield of 2.1%.”