PETALING JAYA: Kelington Group Bhd
’s (KGB) order book stands at an all-time high of RM1.9bil and will help shore up its earnings over the next two years amid gloomy headlines of slowing chip demand.
KGB is a unique proxy to the global semiconductor front-end players, according to HLIB Research and is set to ride on the fabrication spending with South-East Asia slated to register record high investments in 2023.
Year-to-date, KGB has secured orders of RM1.28bil and this is higher than the RM1.19bil recorded in 2021.
HLIB Research noted that KGB’s current order book stands at an all-time high of RM1.9bil, implying a cover of 3.67 times, thanks to the robust wafer fabrication investment pipeline.
The research house said with the higher contribution from the industrial gas segment, it expects KGB’s core profit after tax and minority interest to register a strong 25% financial year 2022 (FY22) to FY24 compounded annual growth rate.
It values KGB at RM1.82 per share, ascribing a 21 times price earnings to FY23 earnings. Semiconductor Equipment & Materials International is projecting global fab equipment spending to register a 9% and minus 2% year-on-year (y-o-y) growth to US$99bil (RM459bil) and US$97bil (RM449bil) in 2022 and 2023, respectively.
Bucking the negative growth rate in 2023, South-East Asia is expected to register a record high investment in 2023, it added.
This buoyant outlook is also augmented by the “China+1” strategy, where semiconductor players look for alternative production hubs outside China, nudging strong foreign direct investment to Malaysia and Singapore, given their well established semiconductor ecosystem in Asean.
Leveraging on its expertise in industrial gases, KGB ventured into the food-grade liquid CO2 gas business in 2017 with its plant commissioned in 2019 in Kerteh.
HLIB Research believes capacity expansion is on the cards.
