PETALING JAYA: RHB Research has turned more constructive on KKB Engineering Bhd
after the company secured its first contract of 2026, a RM212mil oil and gas job from PETRONAS Carigali Sdn Bhd, noting it was “timely” in resetting momentum after a weak 2025.
Its subsidiary, OceanMight Sdn Bhd, had received a letter of award from PETRONAS Carigali for the provision of minor engineering, procurement and construction works on fixed offshore structures and a host tie-in at Erb West for the Belud South Greenfield Development project.
The job is expected to be completed within 13 months from Jan 15, 2026.
“Additionally, the group is expected to reset its activities in financial year 2025 (FY25), whereby projects have reached their tail-end while it continues tendering for a new round of jobs,” the research house said.
The research house highlighted that the win was significant not only for its size (the last contract being above RM200mil was in January 2023), but also for its timing.
KKB’s engineering division had slipped into a net loss of RM7.4mil in the third quarter of FY25 (3Q25) as major fabrication projects wound down, including the Sarawak Shell wellhead platforms and the Rosmari and Marjoram onshore gas plant in Bintulu.
As at the end of 4Q25, KKB’s outstanding order book had shrunk to about RM55mil, underscoring how thin visibility had become before the latest award.
However, RHB Research estimates the group’s current tender book for engineering, construction and manufacturing at around RM700mil, with a further RM1bil of oil and gas fabrication-related tenders in the pipeline, assuming a success rate of 30% to 40%.
Some of these are expected to be decided from 1Q26 onwards.
The research house trimmed its earnings forecasts for the company’s FY25 to FY27 to reflect the drought in new jobs last year, cutting projections by up to 14% for FY25.
Even so, it set a new target price of RM1.42, implying about a 20% upside from the prevailing share price, based on 17 times FY26 earnings.
Beyond oil and gas, RHB Research sees potential upside from infrastructure, particularly water projects, noting that Sabah water supply schemes, possibly led by larger contractors, could open doors for KKB as a subcontractor.
The key risk, it cautioned, remains slower-than-expected replenishment of jobs if tender wins do not materialise as anticipated.
