KKB’s positive exposure to Sarawak’s water developments anchors buy call
KUCHING: KKB Engineering Bhd’s (KKB) positive exposure to the state’s water developments has anchored analysts’ ‘buy’ recommendation on the stock.
The research arm of MIDF Amanah Investment Bank Bhd (MID F Research) maintained‘ buy’ on KKB, highlighting that its view on the group remained anchored by the slew of forthcoming Sarawak water-contracts.
“Based on our channel checks, the call for tender has commenced since last year, to be awarded in the current year 2019 (CY19),” MIDF Research said.
“We expect more awards to take place in the immediate term, given the need-base nature of water structures in Sarawak.
“Accordingly, we continue to recommend KKB for positive exposure on the state’s water developments.”
In a filing on Bursa Malaysia, KKB recently announced that the group and its associate company Edisi Optima Sdn Bhd both received letters of awards from Petronas Dagangan Bhd. These awards were for the price agreement for new and refurbishment of LPG cylinders and for the price agreement for refurbishment of LPG cylinders, respectively.
In the same announcement, it was revealed that KKB also received a purchase order from Laras Jaya Engineering Sdn Bhd, for the supply of mild steel concrete lined (MSCL) pipes for Sarawak Water Supply Grid Programme – Stressed Areas.
“The combined total contract sum for the abovementioned contracts or order is worth approximately RM30.8 million,” the group said.
According to MIDF Research, that amount adds up to RM0.9 billion worth of unbilled jobs for KKB which equates to two-fold visibility to income.
“As announced, the state water project is worth approximately RM2.8 billion. The budget for phase 1 is undisclosed, while a target completion has been set not that far in sight.