PETALING JAYA: Kelington Group Bhd
’s record RM1.83bil contract win in India could pave the way for more projects as the country accelerates the development of its domestic semiconductor build-out, says Kenanga Research.
In a report, the research house said the award, Kelington’s largest contract win since its inception, should support earnings growth through its financial year ending Dec 31, 2027 (FY27) to FY29.
“The record contract win materially strengthens its medium-term earnings visibility and reinforces its positioning as a direct proxy to front-end wafer fab expansion,” it said.
“Kelington’s appointment as main contractor could pave the way for further wins as India accelerates its domestic semiconductor build-out.”
Kelington has been appointed the main contractor for the hook-up works at a semiconductor fabrication facility in Gujarat, undertaking the design, installation, connection, testing and handover of manufacturing, laboratory and support tools across two facility modules.
The contract runs through for 30 months, covers up to 886 tools and is targeted for completion by February 2029.
Assuming broadly even execution over the 30-month project period, Kenanga Research said the contract could theoretically translate into about RM730mil of annualised revenue contribution at full run-rate, although actual recognition will depend on project progress and milestone completion.
The latest award brings Kelington’s year-to-date 2026 new contract wins to RM3.59bil, comprising RM1.23bil secured in the first half, RM538mil secured in July and August, and the latest RM1.83bil award.
Against this backdrop, Kenanga Research raised its FY26 new contract win assumption to RM4bil from RM2.1bil, but maintained its earnings forecasts as the latest contract is expected to be recognised over two to three years.
Meanwhile, RHB Research said it remained “constructive” on Kelington’s earnings prospects following the latest award. It said the latest win pushed cumulative orders above the total secured in FY23 to FY25 combined, as well as its “conservative” RM2.5bil order book replenishment assumption.
RHB Research said its checks with management showed Kelington’s tender book stood at more than RM8bil, excluding the latest win, up from RM7.5bil in the second quarter.
“Positively, sizeable tender outcomes are expected by year-end, including RM3.7bil from Singapore (49% of second-quarter 2026 or 2Q26 tender book) and RM995mil from Malaysia (13.3% of 2Q26 tender book),” it said.
The research house raised its FY26, FY27 and FY28 earnings forecasts by 1%, 11.2% and 15%, respectively, following higher order book replenishment and adjusted margin assumptions.
RHB Research has maintained a “buy” call on Kelington, but raised the target price (TP) to RM11.70 from RM10.50.
“We believe the valuation premium is fair, given Kelington’s strategic exposure to the front-end global semiconductor value chain, which is witnessing an explosive multi-year capex expansion,” it said.
Kenanga Research, meanwhile, reiterated an “outperform” call, citing Kelington’s strong order and tender books, diversified regional footprint, exposure to front-end semiconductor capital expenditure and continued margin expansion. It maintained the TP at RM10.10.
