Stock Name: KKB
Company Name: KKB ENGINEERING BHD
KKB Engineering Bhd
(Sept 13, RM1.65)
Maintain buy at RM1.64 with fair value of RM2.83: KKB Engineering (KKB) announced yesterday that it has secured RM30.7 million worth of contracts. Its subsidiary, Harum Bidang Sdn Bhd, has secured a contract worth RM14.2 million from YWP Builders Sdn Bhd to manufacture and supply MSCL Water Pipes and Pipe Specials for the Bekalan Air Luar Bandar (BALB) project in Sarawak. KKB was also awarded the fabrication, supply and delivery contract for LPG cylinders by Petronas Dagangan Bhd for one year, commencing September with an option to extend for another year. For the first 12 months, the'' estimated contract sum is RM16.5 million.
We were expecting more projects to be announced soon so this is within our expectation. We are positive on KKB's 3Q numbers as the further uptick in construction and engineering activities within Sarawak Corridor of Renewable Energy (Score) will benefit KKB.
Although the supply of water pipes and LPG cylinders fetch narrower margins than fabrication, and KKB posted weaker results for 2QFY11, we are still bullish on this counter because we believe that more projects are expected to kick in within Score, which will benefit KKB.
KKB's healthy earnings before interest and tax (Ebit) margins from its engineering and construction division, strong balance sheet with net cash and undemanding valuation, continue to justify our 'buy' call on the company, with a fair value of RM2.83 based on 10 times FY12 earnings per share. ' OSK Research
This article appeared in The Edge Financial Daily, September 14, 2011.
Company Name: KKB ENGINEERING BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.83 |
KKB Engineering Bhd
(Sept 13, RM1.65)
Maintain buy at RM1.64 with fair value of RM2.83: KKB Engineering (KKB) announced yesterday that it has secured RM30.7 million worth of contracts. Its subsidiary, Harum Bidang Sdn Bhd, has secured a contract worth RM14.2 million from YWP Builders Sdn Bhd to manufacture and supply MSCL Water Pipes and Pipe Specials for the Bekalan Air Luar Bandar (BALB) project in Sarawak. KKB was also awarded the fabrication, supply and delivery contract for LPG cylinders by Petronas Dagangan Bhd for one year, commencing September with an option to extend for another year. For the first 12 months, the'' estimated contract sum is RM16.5 million.
We were expecting more projects to be announced soon so this is within our expectation. We are positive on KKB's 3Q numbers as the further uptick in construction and engineering activities within Sarawak Corridor of Renewable Energy (Score) will benefit KKB.
Although the supply of water pipes and LPG cylinders fetch narrower margins than fabrication, and KKB posted weaker results for 2QFY11, we are still bullish on this counter because we believe that more projects are expected to kick in within Score, which will benefit KKB.
KKB's healthy earnings before interest and tax (Ebit) margins from its engineering and construction division, strong balance sheet with net cash and undemanding valuation, continue to justify our 'buy' call on the company, with a fair value of RM2.83 based on 10 times FY12 earnings per share. ' OSK Research
This article appeared in The Edge Financial Daily, September 14, 2011.
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