AmResearch sees Kimlun as frontrunner for S$100m Singapore MRT job

AmResearch sees Kimlun as frontrunner for S$100m Singapore MRT job
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Tuesday, 17 September 2013 11:36

KUALA LUMPUR (Sept 17): AmResearch Sdn Bhd has maintained its ‘buy’ call on Kimlun Corp with a slightly higher fair value of RM3.22 per share, up 2 sen or 0.06%, as it sees the group possibly clinching a S$100 million MRT job in Singapore.

In a note today, the research house said it is aware that the main contractor of Singapore’s Thomson MRT line was expected to be appointed soon.

“We see Kimlun as a frontrunner to win the tunnel lining segment package, estimated to be worth S$100 million (RM250 million). This award could come out by year-end,” said AmResearch.

“Management noted that it is investing in a new ‘curing TECHNOLOGY []’ at its Johor plant in order to meet new standards for the Singapore MRT job.”

AmResearch also mentioned that development plans for the engineering and CONSTRUCTION [] services provider’s 5.3-acre land in North Medini are not finalized and would only be launched in the end of 2014 or 2015.

“We continue to like Kimlun as a proxy to the surge of construction jobs in Iskandar Malaysia and MRT jobs in Singapore,” said AmResearch.

“As such, our target price of RM3.22 per share is based on a 20% discount to our sum-of-parts derived value of RM4.03 per share. At the current level, it is trading at 5-11 times of price earnings ration for FY13F-15F” said AmResearch.

Meanwhile, the research house said that 70% of Kimlun’s 51%-owned HYVE project has been sold, of which it has a gross development value of RM240 million. Meaningful contributions are only expected from next year onwards, it said.