In the FY20, the group secured an all-time high order of RM490mil with SMIC continuing to award more jobs.
Existing SMIC jobs at hand are expected to keep the group busy until June, excluding ongoing 2021 tenders.
"We came away from a conference call with the management feeling pumped-up over the group’s prospects.
"With increased expansions among wafer fab players taking place this year due to a surge in demand for semiconductor components, we believe that FY21 could yet be another record year, building upon the existing all-time high order of RM490m secured in FY20," said Kenanga.
It said Kelington as the incumbent has the advantage in winning the 2021 tenders, which will consist of UHP holl-up in all four SMIC fabs.
The group has also secured sub-contract jobs from TSMC via a partner as well as Micron, which is looking to expand due to the global memory shortage.
Kelington's tender book currently stands at RM900mil, spread equally across Malaysia, SIngapore and China.
"Being regarded as a preferred vendor among large MNCs, the group is in a favourable position to benefit from various on-going expansions by the likes of WD Penang (announced RM2.3b investment), Micron SG (new fab construction), and Lam Research," the research house added.
Meanwhile, Kelington's LCO2 plant is expected to be halal-certified in a month's time, which will further increase demand as the group penetrates the food and beverage industry.
The plant utilisation has recently increased to 100% from 50% due to strong orders from Singapore, leading to higher average selling prices.
Kelington's operations in all 17 sites in Malaysia are ongoing despite the movement control order as it has received approval as an essential service.
Kenanga maintained "outperform" on the counter while raising its target price to RM3.10 from RM2.30 based on a higher FY21 forecast price-earnings ratio of 32x.
"We believe KGB deserves to be traded at a higher multiple due to its exclusive exposure to the front-end semiconductor boom, which is very rare given that Malaysia is a back-end centric market," it said.
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