Kimlun's cladding is used in the tunnels
KUALA LUMPUR: Construction firm, Kimlun Corp Bhd
’s outperformance was largely due to faster construction progress and large variation orders, according to Maybank Investment Bank Research.
“Excluding forex gains of RM1.5mil, 4Q16 core net profit of RM23mil brings FY16 core net profit to RM81mil, accounting for 108%/106% of ours/consensus full-year forecasts.
“The outperformance in 4Q16 came largely from the construction segment, which reported an EBIT of RM36mil on the back of higher construction works progress and recognition of some large variation orders within the quarter, which led to significant EBIT margins jump by 8.3 percentage points year-on-year,” the research house said.
Maybank noted that Kimlun’s margins from manufacturing continued to normalise as expected after benefitting from the stronger singapore dollar against ringgit in 1H16 as majority of manufacturing earnings is from Singapore projects.
Kimlun’s outstanding orderbook for both construction and manufacturing stand at RM1.67bil and RM260mil respectively as of end-Dec 2016.
Maybank said Kimlun was still eyeing for more construction jobs from KVLRT 3, KL-Singapore HSR, affordable housing projects (PR1MA & PPA1M) as well as more precast orders from rail projects in Malaysia and Singapore.
“We keep our earnings pending the analyst briefing. No change to our earnings and target price of RM2.35 pegged to 10 times FY17 price-to-earnings ratio,” it added.
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