AmResearch keeps Buy call on Kimlun, FV RM2.52


  • Analyst Reports
  • Thursday, 02 Jan 2014

KUALA LUMPUR: AmResearch is maintaining its Buy call on Kimlun Corporation with a fair value of RM2.52, which is 69 sen or 37.7% above Tuesday’s closing price of RM1.83 as it remains upbeat on the company securing more construction jobs.

It said on Thursday Kimlun ended 2013 with a RM115.4mil job from Country View Bhd to build apartments in Johor Bahru. Construction is expected to be completed by December 2015.

“The new award has brought Kimlun’s new job wins in 2013 to a record of RM1.2bil. We expect the new job wins to only contribute strongly from FY14F onwards, as 70% of these were only secured in the 2H of FY13,” it said.

AmResearch said it had a new order book assumption of RM900mil for FY14, RM1bil for FY15 and RM900mil for FY16.

“Potential jobs in the near-term include the tunnel lining segment package (worth S$100mil) for the Thomson MRT line while Kimlun will benefit from KVMRT2 jobs in the mid-to-long term. Kimlun will also benefit from further construction activities in Iskandar Malaysia,” it pointed out.

AmResearch also said shareholders would be voting on Thursday for a proposed one-for-four rights issue, which come with free detachable warrants.

The rights issue is expected to raise RM66mil while the detachable warrants will have an exercise period of 10 years. With an indicative price of RM1.10 a rights share, FY14F-15F core EPS will be diluted by 17.5% and 20% respectively to 19.4 sen and 21.3 sen.

“Amid headwinds in the construction sector, we continue to like Kimlun as a proxy to construction activities within Johor as well as MRT jobs in Klang Valley and Singapore. Maintain Buy,” it said.

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Kimlun , AmResearch , construction , MRT , rights issue

   

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