HLIB Research said the group was able to reverse the sluggish trajectory it experienced in the financial year ended December 2023.
PETALING JAYA: Hong Leong Investment Bank (HLIB) Research is optimistic of Kimlun Corp Bhd
’s prospects, underpinned by the group’s strong order book.
Following a meeting with the group, HLIB Research said it was able to reverse the sluggish trajectory it experienced in the financial year ended December 2023 (FY23).
“Sluggish core profit after tax and minority interest of RM7.1mil (down 80.6% year-on-year) trajectory is expected to reverse in FY24,” the research house said.
Going forward, Kimlun expected decent performance in FY24 before delivering the numbers in FY25 to reflect its order book of RM2.2bil.
The research house noted that the Lawas-Long Lopeng road (RM780mil) under the Sabah-Sarawak Link Road project had reached 25% completion.
“We believe successful execution of its current peak order book could serve as a rerating catalyst,” HLIB Research noted.
“Construction forms the bulk of its order book at RM1.9bil, while pre-cast manufacturing stood at RM300mil.
“Despite lower proportion from manufacturing, the segment typically commands on average a gross profit margin that is three times higher versus construction,” HLIB Research noted.
Despite Kimlun setting conservative replenishment targets, the company could surpass its own targets in FY24 due to multiple factors pointing to the upside.
They included a robust pick-up in construction activities in Johor, the lower ringgit versus the Singapore dollar and pick-up in the Mass Rapid Transit Cross Island line phase two, HLIB Research added.
