PETALING JAYA: Kelington Group Bhd
’s stock price is expected to keep rising as investors are re-rating the stock higher based on its future prospects.
Citing industry tailwinds, RHB Research said semiconductor chip foundries are aggressively pushing capital expenditures, and this massive industry spending is expected to act as a catalyst, propelling Kelington to a strong double-digit compounded annual growth rate in earnings over the financial year 2026 (FY26) to FY28 period.
“The stock’s valuation is supported by reliable operational execution and strong industry momentum.”
RHB Research said global wafer foundries, Kelington’s primary customer base, are aggressively pushing capital expenditure as microchip demand continues to outpace supply.
It said management channel checks confirm that key foundries have already pre-sold production capacity one to two years ahead of facility buildouts, demonstrating strong, multi-year demand driven by artificial intelligence expansion.
The research house expects Kelington’s second quarter of FY26 (2Q26) profit after tax and minority interests (to be announced on Aug 20) to exhibit strong seasonality, growing 32% to 48% quarter-on-quarter to RM40mil to RM45mil.
This is against a solid RM1.92bil outstanding order book in 1Q26.
“Contract wins in FY26 look set to trump the RM1.8bil high in FY22 (FY25: RM1.25bil).
“The outcomes of several notable tenders (Singapore, India and Malaysia) are expected by 4Q26.”
Incorporating RHB Research’s conservative 30% win-rate assumption, the outcome remains a strong catalyst for order replenishment.
The research house added that given the robust project funnel and management’s guidance of earnings eclipsing topline growth, it sees further improvement in Kelington’s gross profit margin and net profit margin in the second half of FY26 and in FY27.
“Meanwhile, we are longer-term positive on the maiden air separation unit investment in India, given the underserved market for industrial gas.”
RHB Research has underscored Kelington’s new market frontier in capturing Japan’s semiconductor revival.
“We see the Japanese market as a natural extension of Kelington’s expanding geographical reach, as it rides on the coattails of its customer’s own expansion opportunities.”
