PETALING JAYA: Engineering and industrial gases company Kelington Group Bhd
is set to record commendable earnings growth for the fourth quarter (4Q24) of its financial year 2024 (FY24) and for 2025.
The group is slated to release its 4Q24 earnings on Feb 26.
RHB Research expects a seasonally stronger 4Q24 with FY24 profit after taxation and minority interests likely increasing by 20% to 30% year-on-year (y-o-y) to a record high.
“Management’s focus on profitability, alongside a shift in product mix towards higher-margin ultra-high purity (UHP) jobs and the ramp-up of its industrial gas business, should drive net profit margin improvements to 8% to 9% in FY24, compared with 6.5% in FY23.
“With a healthy order book estimated at more than RM1bil as of end-December 2024, and a tender book exceeding RM2bil, 2025 is shaping up to be another stellar year.
“We project an FY24 dividend per share (DPS) of six sen, based on a 30% dividend payout ratio (DPR), with the first-half DPR at 52%, surpassing its stated DPR of 25%.”
The research house highlighted that 2024 order wins are expected to exceed the RM1.3bil registered in FY23, with additional UHP jobs inked in 4Q24 from Singapore.
It believes Kelington stands a good chance of securing its maiden UHP job in Europe with tender outcomes likely to be known by mid-year.
Projects vied for include a new fabrication (fab) job in Dresden, Germany, potentially valued at RM900mil and fabs to be constructed by Infineon and Siltronic.
UHP projects in Singapore make up the second-largest portion of Kelington’s tender book after Germany at about RM517mil (20% of tender book) as at 3Q24.
RHB Research maintained its “buy” call on Kelington with a target price of RM4.12 per share with a 20% upside and a 2% FY25 yield.
