KKB jumps on solid earnings

KUALA LUMPUR: Shares of KKB Engineering Bhd jumped at mid-morning on Tuesday after the group's earnings rose more than six-fold to RM26.7mil compared to the same period last year.

At 10.49am, its shares rose 15 sen to RM1.79 with some 2.85 million shares traded between RM1.76 and RM1.86.

The FBM KLCI fell 2.89 points to 1,856.69. Turnover was 737.23 million shares valued at RM449.86mil. There were 138 gainers, 498 decliners and 299 counters unchanged.

According to a filing with Bursa Malaysia, the higher profit margin was due to the engineering and manufacturing sectors, especially from steel fabrication and steel pipes manufacturing divisions.

Meanwhile, AmResearch has maintained its Buy on KKB Engineering with a fair value of RM2.05 a share.

"Notwithstanding 1QFY15’s outperformance, we maintain our numbers for now, amid a depleting order book. We estimate the current outstanding order to be at RM45mil. 

"Our job replenishment assumption for its conventional activities is at RM250mil for FY15F. Tenders for the traditional activities and the O&G segments now stand at RM85mil and RM550mil, respectively," it said.

It added that the Buy call is based on the O&G prospects and thepotential of increased state government spending on rural infrastructure projects leading up to the state elections next year. 

The risks continue to be derived from the cut in spending by Petronas and the lack of sizeable projects in the conventional activities.