KUALA LUMPUR: AmResearch has maintained its Buy on KKB Engineering with a fair value of RM2.05 a share, it said in a note on Tuesday.
The research house said KKB has announced an over 7-fold increase in net profit to RM26.7mil for 1QFY15 from a year earlier, exceeding consensus expectations, vis-à-vis the full-year forecasts of RM35.4mil and RM29.8mil, respectively.
"Notwithstanding 1QFY15’s outperformance, we maintainour 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.
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