KIMLUN CORP BHD

KIMLUN’s FY17 core net profit of RM70mil was down 15% year-on-year (y-o-y) despite a higher revenue of 5%.

This was due to the lower precast revenue contribution of 46%, which has much better margins compared to the construction division, leading to an overall drag in the group’s gross profit margin, which went down by two percentage points.

In addition, the company also provisioned for doubtful debts worth RM11mil on aging receivables. The company’s management does not expect to see further provisions for doubtful debts moving into FY18.

Year-to-date, Kimlun has secured RM70mil worth of construction jobs, within Kenanga Research’s FY18 replenishment target of RM1bil. “We believe our target is achievable as Kimlun aims to continue bagging jobs within the affordable homes segment whereby they can leverage on their IBS construction methods as a competitive edge while also aiming for ongoing major infrastructure construction projects, such as Gemas JB double track, RTS, MRT3, ECRL and HSR.

“We believe Kimlun would submit bids at the sub-package levels for these major rail jobs,” said Kenanga Research.

With the recent awards of Deep Tunnel Sewerage System 2 (DTSS2) to main contractors, Kimlun is currently tendering for the precast packages from these main contractors which we expect to be awarded by the second half of 2018.

Additional prospect within their manufacturing division remains bright, especially for the supply of SBG/TLS/rail sleepers for major rail projects in the near future.

Kimlun has supplied an estimated 50% of segmental box girders (SBG) and tunnel-lining segments (TLS) packages for MRT1 and MRT2. Year-to-date, Kimlun has secured RM40mil worth of manufacturing contracts from Singapore MRT, accounting for 13% for Kenanga Research’s FY18 manufacturing replenishment of RM300mil. Currently, Kimlun’s outstanding construction orderbook stands at an estimated RM1.8bil, providing visibility for the next two years.