KIMLUN - 1QFY14 results within expectations

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 1.77

Analysts neutral over Kimlun's contract

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: KENANGA

Price Call: BUY

Target Price: 1.77

Analysts are neutral over Kimlun Corp's RM64.3 million contract to construct 268 units of houses in Kulaijaya, Johor.

Kenanga Research in a research note today said the contract should make up part of its order book replenishment assumption of RM500 million for financial year 2013.

It said the project is scheduled to be completed by July 2014 and expects the gross margin to hover at about 10 per cent.

"Assuming a net margin of seven per cent, the whole project will contribute about RM4.5 million in total to Kimlun's bottomline for financial year 2013 and 2014," it added.

Going forward, Kenanga Research believes that Kimlun would continue to eye more building projects in the Klang Valley and Johor, given its competitive edge in building projects, which require 70 per cent pre-cast components.

Kimlun has a strong track record of expertise in the pre-cast industry.

Meanwhile, Alliance Research in a separate note, remained positive on Kimlun as a direct proxy for increasing developments at Iskandar Malaysia.

It said Kimlun's forte in the industrialised building system has also an added advantage in bidding for building type jobs from developers.

Kenanga has maintained an "outperform" view on Kimlun with a target price of RM1.77, while Alliance has stuck to a "buy" call with an unchanged target price of RM2.07.

As at 11am, Kimlun's share price stood at RM1.54, improving three sen or 1.98 per cent, with 184,000 shares traded.-- Bernama

2QFY12 within expectations - growth supported by RM1.8b orderbook

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 1.87

Kimlun's target price lifted to RM2.07

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: KENANGA

Price Call: BUY

Target Price: 2.07

Kenanga Research raised its target price on Kimlun Corp Bhd to RM2.07 per share after the builder won a RM148.5 million construction project to build apartments last Friday.

"We tweaked our fiscal year ending Dec 31, 2012 (FY2012) and FY2013 earning forecast higher by seven and 23 percent, respectively, we have factored in additional contract replenishment in FY2012 and maintain our 500 rth of new contract assumption in FY2013," the broker said in a research note on Monday.

Maintaining "outperform" on the counter, Kenanga said it was satisfied with Kimlun's contract flow in FY2012 thus far and it believed Kimlun could be able to secure more contracts in the period of six to 12 months.

By 10.00am, Kimlun's shares rose 0.64 percent to RM1.57 per share, outperforming the Malaysian benchmark stock index that dropped 0.16 percent. -- Reuters

Outlook remains bright with order book growing from new contracts secured.

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 1.87

KIMLUN (FV RM2.37 - BUY) Company Update: Record Year in The Making

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: OSK

Price Call: BUY

Target Price: 2.37

At our recent  visitto  KimLun following the release of its4QFY11 results, management  said the  jobs flow may  continue to  gush, with  a number of forthcoming  contracts including  the TLS of KV MRT SBK line and Singapore's MRTand NEWater extension. Its orderbook has  hit a new high  of RM1.62bn, of which RM597m is secured YTD.All in, we like KimLun's execution track record as well as strong contract winsto date. Hence, we maintain BUY, at a revised FV of RM2.37, based on 12x FY12PER and an enlarged share base, following the completion of the first 5% tranche of its proposed privateplacement.

SturdyRM1.62bn-strong orderbook.  KimLunorderbook  has reached a record RM1.62bn,of which RM597m worth of jobs was secured this year. These comprise the supplyof segmental box girders to the Klang Valley MRT SBK line worth RM223m and 5building jobs in Johor worth a combined RM374m, of which 2 jobs with a totalvalue of RM152m were announced yesterday. Of the RM1.62bn worth of contracts,some 80% is from its construction segment while the remaining RM310m comes fromits precast concrete division. Following a brief meeting with the company'smanagement, we took a look at each of its core focus areas to gauge thecontracts it can potentially win, as well as the jobs outlook for some of itsexisting and new business segments in the near term.     

More works likelyfrom MRT.  KimLun has submitted  a bid  for the  supply of tunnel lining segment  (TLS)  to the KV MRT SBK line,  which we gather may be  officially awardedlatest  by May this year. Management  said there is a possibility of the TLS portion  being split into various packages and shared among KimLun and other local boyssuch as Hong Leong Industries and MTD ACPI. That said, we continue to like KimLun'schances of securing at least a third of the works given its track record viaits current involvement in Singapore's MRT extension. In the long run, we seepotential jobs for KimLun from the widely anticipated 2 new KV MRT linescurrently known as the Circle line and Northwest-Southeast line. We alsounderstand that about 50% of the former may run underground across the city,which could translate into potential TLS contracts amounting to >RM500m,assuming a total value of RM20bn for the said line. 

Contracts fromSingapore could pick up in 2H12.  In2011,  KimLun's operations in Singaporecontributed 7% of the group's topline. Going into 2H12, we understand that the group is looking to secure  more works from the island, with tendersfor  the 35km underground powertransmission cable comprising 2 tunnels having closed at end-Feb and expectedto be  officially awarded out towardsend-2012.  We  continue to see opportunities in the mediumterm as the Singapore government has announced plans to build 2 more rail linestotaling  48km. Meanwhile, management hashighlighted the possibility of contracts from NEWater in relation to watertransmission pipes as well as a sewerage system with a combined length of some50km.

Source: OSK188

Kimlun Corporation - OUTPERFORM - 13 March 2012

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: KENANGA

Price Call: BUY

Target Price: 1.93

Kimlun announced that it has secured another two contractsfrom SP Setia and Keck Seng Bhd with a total contract sum of RM151.6m. Thefirst project was awarded by SP Setia for the construction works of service apartmentsand ancillary buildings in Johor Bahru (contract value of RM115m) and thesecond project was from Keck Seng Bhd for the construction of 244 units of housesin Johor Bahru with a contract value of RM36.9m. We are maintaining ourearnings forecasts at this juncture for Kimlun as we had factored in thesecontract values in its RM550m annual order book replenishment. The company'soutstanding order book now stands at around RM1.6b and we continue to maintainour OUTPERFORM recommendation on Kimlun based on an unchanged target price ofRM1.93 based on 8.0x PER pegged on its FY12 EPS.

Series of housingconstruction projects.  To recap,Kimlun was awarded a construction project worth RM68.3m by Dynasty View SBearlier this month. Yesterday, Kimlun nailed another two new projects from (1)SP Setia for the construction of apartments and ancillary buildings in JohorBahru worth RM114.7m, expected to complete by February 2014 and (2) Keck SengBhd  for the construction of 244 housesin Johor Bahru worth RM36.9m which would see an earlier completion aroundSeptember 2013.

Order book stands atRM1.6b.  Kimlun's outstanding order bookcurrently stands at RM1.6b and with its recent contract awards secured, thiswill provide earnings visibility for the group until 2015. Apart fromsuccessfully securing projects from the Johor region, management has reiteratedthat they are also actively looking for more construction opportunities underthe ETP initiative for the Greater KL project. 

Singapore market.  Management has previously guided that therewould be plenty of opportunities in Singapore as the Singapore government hasallocated approximately SGD60b worth of rail line and complex expresswayprojects over the next 10 years. We believe that given Kimlun's strong trackrecord, it would be a strong contender for the supply of precast products to theSingapore market. To recap, SPC Industries is a subsidiary of Kimlun and it hasmanaged to secure approximately 50% of the total TLS (tunnel lining segment)supply orders for the Downtown Line project in Singapore. 

We continue tomaintain our OUTPERFORM recommendation on Kimlun with an unchanged Target Priceof RM1.93 based on 8.0x PER pegged on its FY12 EPS.  There are also no changes to our FY12-13earnings forecasts at this juncture.

Source: Kenanga

Kimlun Corporation - OUTPERFORM - 7 Mar 2012

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: KENANGA

Price Call: BUY

Target Price: 1.93

Kimlun hasbeen awarded a contract for the construction of apartments and ancillarybuildings in Johor Bahru. The project is owned by Dynasty View SB, which ispart of United Malayan Land. We are keeping our earnings forecasts unchanged asthe contract is part of its RM550m annual order book replenishment, which wehave already factored into our forecast. Given the potential upside of 26% andthe likelihood of it securing a supply contract for the TLS, we are maintainingour Outperform rating on Kimlun with an unchanged target price of RM1.93. Thisis based on 8.0x PER on its FY12 forecast EPS. 

Award forthe construction of apartments and ancillary buildings in Johor.  It was announced yesterday that Kimlun hasbeen awarded the construction of apartments and ancillary buildings in JohorBahru for a total contract sum of RM68.3m, which it expects to complete byDecember 2014. The project is by Dynasty View SB, which is a subsidiary ofUnited Malayan Land. The contract value is part of the company's RM550m annualorder book replenishment, which has already been imputed in our estimates.  As at year to date, the company's currentoutstanding order book is RM1.5b.

No changeto our FY12-13E earnings forecasts of RM55.4m-RM61.0m. We have already factoredin a RM550m annual order book replenishment in our estimates and we aremaintaining our FY12 and Y13 earnings forecasts at this juncture. 

MaintainOutperform. Looking at 26% potential upside from the current price, wereiterate our Outperform recommendation with unchanged target price at RM1.93, basedon 8x PER of its FY12 EPS of 24.2 sen.

Source: Kenanga

KimLun (BUY; FV: RM2.07, Last Closing: RM1.53)

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: OSK

Price Call: BUY

Target Price: 2.07

Contract flows picking up momentum. The announcement came in as a positive surprise to us, with KimLun's YTD jobs securedstanding tall at RM445m. As we step into 2QCY12, KimLun has already exceededour expectations by achieving 74.2% of our orderbook replenishment forecast ofRM600m p.a. for both FY12 and FY13. Nonetheless, we make no changes to ourassumptions for now, although there is a potential upside bias should the groupsecure the supply of tunnel lining segment for the KV MRT SBK line as well assome possible job flows from the Singapore MRT on new line expansions.

Keep an eye out fortunnel lining segment. Earlier last month, KimLun entered into a sale andpurchase agreement to acquire a parcel of industrial land in Seremban for RM15.5mto construct a new precast  plant. Thisexpansion will prime the company for potentially securing some tunnel liningsegment contracts in the underground portion of the MRT SBK line. We expect itsshare price to continue to trend upwards, pending the official award of thetunneling portion of the said line by MRT Corp come April this year. Weunderstand that the Gamuda-MMC JV,  whichwe believe  is  likely to snag  the tunneling portion, hadvisited KimLun's existing precast plants to conduct quality control checks.Over the medium term, we expect to hear more from the Iskandar region while inthe long run, we believe KimLun will likely gain a stronger foothold inSingapore, as we understand that a 35km underground cable tunnel is likely tobe awarded this year, with the 50km Thompson Easter Region line also in thepipeline. 

BUY. Maintain ourBUY call at an unchanged FV of RM2.07 based on 10x FY12 PER. We continue tolike KimLun given its strong execution track record, sturdy job wins YTD, aswell as its increasing presence in the Johor and Singapore region. Thus, weview it as the best small cap proxy for Malaysia's construction sector.

Source: OSK188

4QFY11 results within expectations

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 1.87

3QFY11 within expectations. Outlook remains positive.

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 1.84

2QFY11 results in line with expectations. Maintain Buy.

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 1.84

Kenanga maintains 'buy' call on Kimlun Corp

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD

Research House: KENANGA

Price Call: BUY

Target Price: 2.66

Kenanga Research has maintained its "buy" recommendation on Kimlun Corporation with a higher target price of RM2.66
compared with RM2.16 previously.

In its Company Update today, the research house said Kimlun had secured a contract from Tanah Sutera Development Sdn Bhd to develop residential units in Mukim Pulai due to complete by August 2013.

"With this award, its current outstanding order-book is approximately RM1 billion," it said.

"It is also worth noting that Kimlun could potentially benefit from the Klang Valley MY Rapid Transit (KVMRT) tunneling portion," it added.

Kenanga Research said the management of Kimlun was actively looking for a piece of land in the Klang Valley for its manufacturing base, highlighting its confidence in the KVMRT project.

This strategy was also largely aimed at addressing the higher mobilisation cost issue should Kimlun win the project as the utilisation of its Johor plant was currently dedicated for its projects in Singapore and Johor.

"We like Kimlun for its IBS exposure and its niche position in the construction sector where it stands a higher chance to win the KVMRT project (tunnel lining segment)," Kenanga Research said. -- Bernama

KIMLUN - OSK Research: KimLun main winner in Iskandar Malaysia

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD
Research House: OSK

KUALA LUMPUR: OSK Research said from a CONSTRUCTION [] angle, it views KimLun (BUY, FV: RM2.32) as the primary beneficiary from more job flows at Iskandar Malaysia.

It said on Wednesday, April 13 this is by virtue of: (i) its extensive track record of jobs within Johor and (ii) its Johor based status which provides an advantage as some Iskandar jobs are only limited to such contractors. With Iskandar at its tipping point, we expect to see more private sector development taking place.

'Given KimLun's established clientele base of reputable listed developers, we expect it to secure more contracting jobs for new launches,' it said.

KIMLUN - Kitchen-sinking in construction

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD
Research House: OSK

Construction sector
Maintain overweight: During the 4Q10 reporting season last month, we noted that some contractors had embarked on kitchen-sinking exercises.
WCT Bhd and MTD Bhd (not rated) each made RM36 million in provisions for Bakun Dam. The provisions comprise: (i) RM26 million for additional costs required to complete the job; and (ii) RM10 million for contributions on the part of two other consortium members that are unlikely to be able to meet the cash calls of the MCH JV, which is undertaking the Bakun Dam job.

Ahmad Zaki Resources Bhd (AZRB) reversed out RM99 million in revenue for its Alfaisal University job in Saudi Arabia. The job has incurred delays and the reversed sum represents the associated prolongation costs.

Sunway's associates were in the red mainly due to RM18 million in profit reversal on its Al Reem project. Job delays led to an upward revision in costs and Sunway chose the most conservative approach by reversing out all its past profits.

Although AZRB has a 7.7% stake in the MCH JV (similar to WCT and MTD), it did not make the RM36 million provision. We understand that the individual members of the JV were given the discretion on how much to provide, subject to their auditors' approval. Unlike WCT and MTD, AZRB was never awarded any of Bakun's construction packages by the MCH JV. While AZRB was in the running for one package worth RM240 million, the job was subsequently awarded to Sinohydro Corp as its price was slightly lower. We gather that due to cost overruns, the final cost of that package had ballooned to over RM400 million.

Last December, AZRB instituted a RM58 million counter-claim against three members of the JV (Sime Engineering Sdn BHd, WCT and Sinohydro) on the grounds of breach of their fiduciary duties. Management maintains its view that no provisions for Bakun will be made. Should AZRB be required to make a provision for the RM36 million, this would wipe out our FY11 earnings forecast of RM35.8 million.

The 1.33 billion dirhams (RM1.32 billion) Al Reem job in Abu Dhabi comprising five towers was awarded to a consortium comprising IJM Corp Bhd, LFE Corp Bhd, Sunway and Zelan Bhd (each with a 25% stake) in 2006. The job is now 95% complete and Sunway will not be recognising any profits on the remaining portion of works. There was no profit reversal on the part of IJM as it had not recognised any to begin with. Based on the notes accompanying the recent results, there was no indication of either Zelan (NR) or LFE (NR) recording any profit reversals on the said job.

We highlight two risks that may lead to more kitchen-sinking:
(i)'' ''drastic increases in material prices, and
(ii)'' ''the further spread of the Middle East unrest. An unexpected rise in material prices cannot be discounted given that oil prices are now above US$100 per barrel. This would lead to failure to achieve the targeted margins on existing jobs, which may in turn result in profit reversals and provisions. In the Middle East, Malaysian contractors have minimal exposure to the countries experiencing protests but if these spread, ongoing jobs could be adversely impacted (WCT is the most exposed at 52% of its order book, mainly in Qatar). This may give rise to project delays and in the worst-case scenario, cancellations.

While we regard the recent kitchen-sinking exercises as one-off events that are unlikely to recur, spiralling material prices and escalation of the Middle East crisis remain the key risks. For now, we maintain our 'overweight' rating on the sector, driven primarily by:
(i)'' ''implementation of the various projects under the Economic Transformation Programme; and
(ii)'' ''the potential of more contract awards as the government attempts to generate a feel-good factor given the potential of an early general election. Our top picks are Gamuda Bhd ('buy', target price: RM4.78) and Mudajaya Group Bhd ('buy', TP: RM7.44). For small cap plays, we like KimLun Sdn Bhd ('buy', TP: RM2.32). ' OSK Research, March 10


This article appeared in The Edge Financial Daily, March 11, 2011.

KIMLUN - OSK Research initiates coverage of Kimlun, TP RM2.34

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD
Research House: OSK

KUALA LUMPUR: OSK Research has initiated coverage on Kimlun with a BUY rating and RM2.34 TP (+34% upside) based on 12x mid CY12 earnings.

It said on Friday, Jan 28 that Kimlun's orderbook comprises fast-track jobs and has a clientele of reputable developers.

'Its use of the IBS (integrated building systems) CONSTRUCTION [] method gives it an advantage over traditional construction. Our proposition for the stock centers on three themes: Iskandar exposure, Singapore MRT expansion and the KL MRT. Kimlun is our top sector pick for small cap contractors,' OSK Research said.