PETALING JAYA: Kimlun Corp Bhd
is poised to see better growth premised on its strong orderbook of more than RM3bil, composed of 77% building works and 23% infrastructure projects.
The engineering and construction service provider has seen its construction division bolstered by a robust Johor property market and upgrades to its existing infrastructure.
In a recent report, Rakuten Trade Research said in addition to its total contract wins in 2024 totalling RM2.2bil, the group is likely to benefit from the Johor-Singapore Special Economic Zone (JS-SEZ).
Analysts have opined that construction and property players were among the biggest winners from this mega project.
Currently, the group is already involved in the construction of Arden Tower, a serviced residence in Johor that is set to be the state’s second-tallest building.
According to Rakuten Trade, the group is positioning itself as a key local partner for upcoming projects including the JS-SEZ infrastructure, customs and immigration facilities, and connectivity upgrades linked to the Johor-Singapore Rapid Transit System.
“With over four decades of experience in Johor, Kimlun is well-positioned to ride the Iskandar revival theme.
“The Arden Tower project serves as a flagship win in this renewed development cycle,” the research house said.
It also foresees Kimlun benefiting from macro trends, particularly the resurgence of infrastructure developments in Malaysia with projects spanning across Johor, Sabah, and Sarawak, with key projects such as the MRT3 and Pan Borneo Highway Phase 2 gaining traction.
“Additionally, the robust project pipeline of mass transit and tunnelling works in Singapore continues to present opportunities for Kimlun’s precast division, which is well-aligned with the Land Transport Authority’s specifications,” the research firm noted.
Kimlun currently has a net gearing of 0.7 times as of the first quarter of 2025.
Rakuten Trade says it expects the group’s net gearing to decrease to 0.6 times backed by stronger earnings projected for financial year 2025 (FY25), as well as the RM40mil proceeds from the private placement exercise that Kimlun implemented recently.
Despite not having a formalised dividend plan, Kimlun has been paying between 14% and 44% of its net profit in the last 14 years except in 2021 and 2022 because of the Covid-19 pandemic.
“We are projecting Kimlun to pay a dividend of 2.3 sen and 2.6 sen for FY25 and FY26 based on a payout ratio of 15%, translating into yield of 1.8% and 2.1% respectively.”
With that, the research house has placed a “buy” call on the group with a target price of RM1.75.
Last Friday, Kimlun’s share price was recorded at RM1.38 with a market capitalisation of RM535.4mil.
