PETALING JAYA: Kelington Group Bhd
(KGB) is well poised for strong earnings visibility over the next few years, bolstered by its RM555mil contract wins year-to-date as well as RM1.4bil outstanding order book as at the end of 2025, says Kenanga Research.
Recently, the group further strengthened its presence in India via a turnkey gas distribution system contract for a semiconductor wafer fab in Gujarat worth US$105mil. Excluding a further US$17mil in letters of intent or scope expansion, total confirmed wins for the project has been lifted to US$115.4mil.
According to Kenanga Research, KGB had earlier guided for another strong year in financial year 2026 (FY26), with reported net profit targeted to grow at a double-digit pace, inclusive of foreign exchange and other adjustments.
For FY25, Kelington reported a revenue of RM1.27bil, broadly in line with RM1.27bil delivered in FY24. Net profit rose 21.5% year-on-year to about RM151mil.
Revenue was primarily driven by Singapore (up 35%), reflecting the ramp-up of new projects in the region, along with contributions from projects in Germany.
This was partially offset by declines in Malaysia (down 10%) and China (down 25%), due to a timing gap between the completion of existing projects and the start of new ones.
Revenue from the industrial gases division fell 19%, primarily due to weaker demand for certain traded specialty gases.
However, demand for liquefied carbon dioxide remained stable and even showed an improvement compared to FY24.
The advanced engineering division remained a stable revenue contributor, supported by projects in Singapore and Germany.
The process engineering division posted a 9% increase in revenue, mainly driven by projects in Taiwan. Meanwhile, revenue from the general contracting division grew 17%, supported by operations in Malaysia.
Regarding order wins, KGB management aims to deliver another record year, with an indicative FY26 target of RM1.5bil to RM2bil, broadly in line with the research house’s RM1.8bil assumption.
Notably, KGB’s management highlighted that its order-book replenishment is not dependent on any single mega project, as the group has a healthy pipeline comprising multiple tenders worth RM4.6bil in aggregate (as of end-FY25) that could collectively drive total order wins.
“We maintain our FY26 to FY27 earnings forecasts and keep our target price unchanged at RM6.15, based on 30 times FY26 forecast price-to-earnings ratio.”
The research house maintained an “outperform” call on the stock.
