RHB Research expects additional order wins into fourth quarter ended Dec 31, 2025 to drive cumulative orders to an all-time high.
PETALING JAYA: Engineering firm Kelington Group Bhd
’s latest contract announcement valued at RM108mil is a signal for the stock’s valuation expansion due to “scarcity value” and strong earnings momentum, says RHB Research.
While its forecast for earnings remained unchanged as the latest contract falls within order book replenishment assumptions, the research house had kept a “buy” recommendation on the stock with revised target price of RM6.10 from RM5.55.
“We expect additional order wins into fourth quarter ended Dec 31, 2025 to drive cumulative orders to an all-time high.
“Given the continuing strong earnings execution, robust tender book pipeline and the progressive margin expansion, a valuation expansion is not unwarranted with the stock exhibiting some scarcity value,” it said.
The contract announcement, in which the company secured a project related to an advanced packaging facility in Singapore for a US-based semiconductor manufacturer, brought its order book to an estimated RM1.1bil or 61% of Kenanga Research’s replenishment assumptions, matching the amount secured in 2024.
It noted that Kelington has an entrenched relationship with the US-based manufacturer, having executed multiple ultra-high purity/advanced engineering jobs.
The latest job involved the customer’s high-bandwidth memory advanced packaging facility, a first in Singapore that caters to the burgeoning demand for artificial intelligence chips.
Other contract wins include RM244mil from a German chipmaker announced last month as well as a series of other contracts totalling RM164mil announced over July and August.
After adjusting for the recent contracts secured, the company’s tender book stood at an estimated RM4bil.
“Notable tenders with oucomes forthcoming include the second advanced engineering job in Dresden (RM1.4bil), India (RM1.1bil), China/Hong Kong (RM600mil) and Singapore (RM600mil),” it said.
The company recently incorporated a Japanese subsidiary with discussions ongoing with the Japanese government’s upstart foundry Rapidus and a US-based chipmaker building a new facility in Hiroshima, it added.
