Kimlun valuations remain attractive, says RHB

KUALA LUMPUR: RHB Research believes Kimlun Corp Bhd's valuation remains attractive as it expects near-term replenishment opportunities coming from infrastructure projects.

The research house said it has adopted a more sanguine outlook in light of the recent signing of the Johor Bahru-Singapore Rapid Transit System project, North-South Corridor and Jurong Region Line.

"We think the valuation remains attractive at 7.8x FY21F EPS, a c.17% discount to small-cap construction peers’ CY21F P/E," it added, while maintainng its "buy" recommendation on the stock.

Its target price was kept at 93 sen per share, which represents 9% upside with 1% forecast FY20 yield.

Meanwhile, Kimlun has announced the acquisition of two plots of freehold commercial land in Bandar Seri Alam from Seri Alam Properties for RM40.5mil cash.

RHB views the purchase price of about RM83.61psf as attractive given the asking price of RM145psf for ap arcel of commercial land near Bandar Seri Alam as detailed in the Bursa Malaysia announcement.

However, the research house is cautious over the rising debt given Kimlun's back-to-back land acquisitions amid a sluggish property market.

"Assuming that 60% of the MYR40.5m will be funded via bank borrowings, this would raise Kimlun’s gearing ratio by approximately 0.03x based on audited FY19

numbers," it said.

Kimlun had purchased land in Johor for RM82.1mil for development purposes in 2019.

A further purchase of a 49% stake in Bayu Damai Equity (RM40mil) and two land parcels (valued at RM36mil) in Johor remains ongoing and are likely to fully hit its books by end FY20, said RHB.
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

RHB Research , Kimlun Corp


Did you find this article insightful?


Next In Business News

Bursa Securities strikes off dealer's rep from register for misconduct
Malaysia Airlines set for recovery, post-pandemic, Khazanah says
Khazanah MD: Valid for govt to seek higher dividends during trying times
CPO futures close higher, boost from soybean
Maybank appoints Shahril chief sustainability officer
Khazanah's holding in Malaysia Airlines diluted by debt restructuring
Singapore's GIC cashes in on Taiwan stock boom -sources
Fall in glove stocks offsets banks' rally
Norway's Seadrill writes down US$2.9bil on its oil rigs
TM ONE introduces new brand strategy and enhanced website

Stories You'll Enjoy