Analysts ‘buy’ on KKB after two new supply, deliver awards
KUCHING: Analysts have maintained ‘ buy’ on KKB Engineering Bhd ( KKB) after the group won two contract awards to supply and deliver pipe and steel products.
In a filing on Bursa Malaysia, KKB’s board of directors announced that subsidiary KKB Industries ( Sabah) Sdn Bhd received a Purchase Order from Leadshine Sdn Bhd for the Supply and Delivery of Concrete-Lined Mild Steel Pipes.
Additionally, KKB was awarded the Tender for Annual Supply and Delivery of Steel Products from Syarikat SESCO Bhd.
“The total combined contract sum for the abovementioned two contracts is approximately RM17.75 million,” the group said in the filing.
According to the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), this will add to the outstanding orderbook of KKB which (as of December 2018) stood at RM0.9 billion.
“Hence, the current unbilled job will keep KKB busy for the next two years until current year 2021 (CY21),” MIDF Research said.
MIDF Research highlighted that so far in 2019, KKB has managed to replenish the group’s orderbook with sizeable contracts, which includes the award from Jabatan Bekalan Air Luar Bandar Sarawak.
It further highlighted that these are water-related contracts of various scope with value amounted to RM110.8 million.
On another note, MIDF Research recapped that the state water project is worth RM2.8 billion.
“Accordingly, KKB’s tenderbook will likely expand as the bids for tender could likely intensify during the year. This is in respect of the need-base nature of proper water system in the identified stress areas.
“For financial year 2019 ( FY19), the new jobs assumptions we ascribed is approximately RM250 million.”
As such, MIDF Research ma i n t a i n e d it s ‘ buy ’ recommendation on KKB with an unchanged target price of RM1.35 per share, as the research arm opined the risk-reward embedded in KKB’s prospect is attractive.
“In the near term, KKB is expected to bid in more open tenders of projects to be rolled out particularly by the Sarawak state government.”