PETALING JAYA: Kumpulan Kitacon Bhd
offers investors a compelling balance of cash-flow visibility, balance sheet strength and attractive shareholder returns.
CGS International (CGSI) Research noted Kitacon’s healthy earnings visibility stems from its order book of RM1.3bil, backed by a net cash position of RM264mil with zero debt as of end June.
The research house expects Kitacon’s dividend distribution to expand in the financial year 2026 (FY26) to four sen per share from three sen in FY25. At the current stock price level of 63 sen a share, this translates into a robust forward dividend yield of 6.2%.
Kitacon’s current order book includes RM361.3mil worth of year-to-date contract wins, which is close to its full-year target of RM500mil, the research house noted.
This RM1.3bil order book pipeline represents 1.5 times its projected FY26 revenue, guaranteeing clear earnings visibility over the medium term and serving as a key operational cushion against sector volatility, the research outfit noted in a report.
Kitacon’s latest contract is a RM54.9mil job from repeat client Sime Darby Property Bhd at Elmina Business Park.
The work scope covers the construction of 14 detached factory units along with main switch and distribution substations over a 22-month period beginning Nov 30, 2026.
CGSI Research noted the contract reinforced Kitacon’s capability in industrial developments and highlighted ongoing township opportunities in key industrial hubs like Elmina and Bandar Bukit Raja.
Margins for the project are expected to hold within Kitacon’s established 13.8% to 14.5% gross margin range.
Unsurprisingly, CGSI Research has retained its “add” call on the stock and a target price of RM1.05 a share.
Kitacon is now trading at 1.1 times 2026 ex-cash price to earnings (PE) multiple and seven times 2026 P/E versus sector average of 15.7 times, it added.
“In our view, this overly discounts its well-managed operations, clean balance sheet and robust 2026 return on equity of 12.1%,” CGSI Research wrote.
