Cheaper compared with the peer valuation PE ratios compared with their peers, Kimlun enterprise is trading at a discount of 47%. It also gained 3.4% dividend yield, and 2011-13 fiscal years, a strong 20 percent compound average annual growth of the long support. The contribution of the manufacturing sector. The Kingland enterprise manufacturing business contributions, mainly from the ready-mix cement concrete product. It is already the major supplier of light rail projects in Singapore. Ready-mix cement concrete product demand will be from Singapore to expand light rail network engineering. Singapore plans in 2020, the MTR network, extending from the existing 138.2 km to 278 km. This project, together with other infrastructure projects, expected to be up to about 122 billion ringgit in the next 10 years. With a proven track record, so it is a great opportunity to benefit from the works of ready-mix cement concrete accessories from the Sungai Buloh - Kajang MRT scheme's tunnel, the tunnel project value is expected to reach 8 billion ringgit.
We met up with Kimlun’s management recently and the following are the updates. Strong order book… Kimlun has done well to replenish their order book for both the construction and manufacturing divisions with RM794m worth of significant projects secured YTD. Outstanding construction orders stood at ~RM1.5bn with ~RM386m worth of manufacturing orders. With the current orders, the construction division will remain busy over the next 1.5-2 years while the manufacturing division will remain fully utilised over the next 3-4 years. Focus on execution… Although the large order book will fuel strong revenue growth for Kimlun, we believe that earnings will not grow in tandem as higher start-up costs for its new manufacturing facilities; engagement of specialist contractors for certain projects; and higher financing costs to fund capex will eat into their margins. The management will be focussed on project execution and selective in bidding for new jobs given their stretched resources. Kimlun has proved its technical competency by securing a major portion of precast works for the KVMRT project. The company has also done well in terms of order book replenishment. However, share price has remained muted, trading at undemanding P/E of ~8x. Hence, we continue to see value in the company and maintaining our BUY call with a TP of RM2.04 based on 10x average FY12-13 earnings.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Kim Yap Lau
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