Brighter FY 24 outlook for Kimlun backed by roll-out of public projects

Kimlun Corporation Bhd’s (Kimlun) growth prospects for the financial year 2024 (FY24) is expected to remain positive, driven by the roll-out of public infrastructure projects.

“We expect a brighter outlook for Kimlun in FY24 backed by the roll-out of public infrastructure projects.

“We understand that Kimlun is eyeing work packages and pre-cast concrete product orders from Pan Borneo phase 2, Johor Bahru – Singapore RTS project, flood mitigation projects, Singapore Cross Island Line, semiconductor factories, and MRT3,” said the research team at Kenanga Investment Bank Bhd (Kenanga Research) in a report.

Meanwhile, on the group’s first contract for FY24, the research team said it is positive on this first contract win for Kimlun in FY24, which has boosted its construction outstanding order book by seven per cent to RM1.99 billion (inching closer to its peak order book of RM2.4 billion seen during the last upcycle in FY17).

Kimlun bagged its first key construction job in FY24, namely, a RM133.6 million building job in Johor, boosting its outstanding order book to RM1.99 billion, which will keep it busy for the next two to three years.

The contract is due for completion in 3QCY26.

“We estimate that the contract will fetch a gross profit margin of seven to nine per cent,” it added.

All in, Kenanga Research said: “We like Kimlun as it is a beneficiary of the rollout of public infrastructure projects, it capitalises on the stable public infrastructure sector in Singapore with its precast concrete products manufactured in Johor, and its strong earnings visibility backed by an outstanding order book of RM1.99 billion which will keep it busy for the next two to three years.

“However, its valuations are rich a er the recent run-up in its share price.”

As such, it maintained its ‘market perform’ rating on the stock.