Booking.com

Booking.com

Favorite Links

Wednesday, September 11, 2013

KimLun Corp - On Firmer Ground In FY14

Source: http://klse.i3investor.com/blogs/rhb/36712.jsp

We cut our FY13 forecast by 13% but maintain our BUY call and MYR2.61 FV. While YTD new construction contract wins have exceeded targets, these new jobs will not hit significant billing milestones in FY13. Kimlun is a “must-own” stock along the value chain of the Klang Valley MRT project, given its involvement in the production of segmental box girders (SBG) and tunnel lining segments (TLS).

- No significant milestones from new jobs in FY13. Kimlun Corp (Kimlun) has reiterated its cautious guidance for FY13 earnings despite strong YTD new construction contract wins of MYR1bn, as these new jobs will not hit significant billing milestones during the period. It has also guided for another MYR50m-100m in new construction contracts before the year is up. This raises the company’s FY13 new construction orderbook target to MYR1.1bn.

- “Growing pains” at concrete products division. The company said its concrete products division is undergoing “growing pains” due to start-up costs and the initial low 30-40% utilisation of rated capacity at its new plant in Seremban in Negeri Sembilan. In addition, it will be investing in new “curing” technology at its plant in Ulu Choh, Johor, in anticipation of a change in standards for certain Singapore-bound concrete products.

- Hyv e is 70% sold. Kimlun’s maiden property project, Hyve Soho Suites, has been a runaway success. The MYR240m 51%-owned development on five acres in Cyberjaya’s central business district (CBD) is already 70% sold. We are projecting for the property development to contribute 15% of total EBIT in FY14.

- Maintain BUY. The construction sector’s prospects are strong, buoyed by the MYR73bn Klang Valley MRT project as well as other ongoing and shovel-ready mega projects. We also like Kimlun’s involvement in the production of SBG and TLS for the Klang Valley MRT project, making it a “must-own” stock along the value chain of this mega public infrastructure project. Maintain MYR2.61 FV, premised on 10x FY14 EPS, in line with our benchmark one-year forward target P/E of 10-16x for the construction sector.

Source: RHB


No comments:

Post a Comment