New contract announcement sparks buying interest in Kimlun shares

by **Cals** Thu 27 Mar 2014, 12:38

Business & Markets 2014

Written by Bernama

Thursday, 27 March 2014 12:17

KUALA LUMPUR (Mar 27): Kimlun Corp Bhd's announcement of a contract award sparked buying interest in the company's shares on Bursa Malaysia this morning.

The shares rose five sen to RM1.64, with 814,800 lots transacted as at 10.54 am.

Yesterday, Kimlun announced that its wholly-owned subsidiary, SPC Industries Sdn Bhd, had been awarded a RM51.3 million contract from Shanghai Tunnel Engineering Co Ltd for the supply and delivery of precast concrete segments (TLS) to Contract T206, Thomson Line of the Singapore MRT (SMRT) system.

The supply of the TLS is expected to spread over a period of about 36
months.

Kenanga Research says it is neutral on the contract win as it makes up part of the research firm's financial year (FY) 2014 manufacturing orderbook replenishment assumption of RM200 million.

"We also understand from the management that the upcoming Thomson Line and the Eastern Region Line comprise a total length of 51km, and the total TLS requirement for this line is estimated at S$130 million (RM338.06 million).

"We believe similar projects could be awarded to Kimlun in the latter part of the year, based on its experience and good track record for the ongoing Downtown Line," it said in a note.

Going forward, Kenanga Research said the new contract win had further boosted Kimlun's total outstanding orderbook closer to RM2.3 billion, providing earnings visibility for the next two years.

Earnings in the property division should pick up in FY14, thanks to its strong unbilled sales of RM125 million from its maiden property development, The Hyve in Cyberjaya.

The research firm has maintained its core earnings forecast on Kimlun for FY14 at RM51.6 million as the contract value is well within its orderbook replenishment assumptions.

It has also maintained its "underperform" recommendation on Kimlun with an unchanged target price of RM1.55.