KUALA LUMPUR: Kelington Group Bhd is on track for another year of tremendous earnings growth, backed by higher demand for its ultra-high purity (UHP) segment due to massive front-end expansion amid the global chip shortage, says Kenanga Research.
This comes following back-to-back record high quarterly earnings, which brought the financial year 2020 (FY20) core net profit to RM21.8mil.
Kenanga Research, which has maintained its “outperform” recommendation with a target price of RM3.10, said the performance was above expectations at 162% and 143% of its and consensus full-year forecasts, respectively.
“Despite a pandemic year, Kelington managed to clinch RM490mil new jobs in FY20, its highest ever in a year, chalking a solid 27% increase from RM386mil in FY19.
“Such unparalleled track record coupled with its superior skill set will equip the group with great advantage moving into FY21, which we strongly believe will be another year of tremendous earnings growth, ” it said in a note to clients yesterday.
It added that this was owing to the group’s unique exposure to the front-end wafer fabrication players, which are scrambling to expand capacity amid the current global chip shortage.
Meanwhile, China’s chip giant SMIC is requesting Kelington to speed things up at its Shanghai plant and hinted at more UHP-related job awards.
The group has a tender book of about RM900mil spread equally across Malaysia, China and Singapore.
Kenanga has maintained its FY21 core net profit forecast of RM31.3mil and introduced a FY22 core net profit forecast of RM35.5mil, representing 43% and 14% growth, respectively.
The company offers a range of services, including design and modeling, fabrication and installation, quality testing and certification, control and instrumentation, and maintenance and servicing.
Its shares closed seven sen lower to RM2.29 yesterday.