Maintain HOLD

Kimlun has won two additional building contracts with a total worth of MYR264m, lifting its orderbook by 17% to MYR1.86b. Further job wins could come from other Klang Valley highways while precast orders could be lifted by rail projects. Our earnings forecasts are unchanged as these have been imputed into our forecasts. Maintain HOLD with an unchanged MYR1.70 TP (based on 11x 2017 PER).

Won MYR264m jobs

Kimlun has recently clinched two building construction contracts with a total worth of MYR264m consisting of: i) a MYR165m contract from Hillcrest Gardens (Non-Listed) for the construction of affordable apartments in Selangor and ii) a MYR98m job from Mah Sing Group (MSGB MK, HOLD) to build houses in Johor. The works are expected to complete by Apr 2019 and July 2018 respectively.

Increasing orderbook by 17%

These increased Kimlun’s outstanding orderbook by 17% to MYR1.86b, we estimate. Assuming a pretax profit margin of 6.5%, we forecast a net profit contribution of MYR13m (4.3sen EPS) into 2019.

Fairly valued

Total construction job wins YTD amounted to MYR932m. We retain our earnings forecasts which have imputed MYR1.3b construction job wins for 2016. Although we expect further job wins from the Klang Valley highways including DASH and SUKE, we believe these are reflected in the current share price which values the stock at 11.4x 2017 PER.

Source: Maybank Research - 4 May 2016