Don't worry too much about AmInvest TP, it's bungkus one anyway, I have experience with their TP for another counter, way way off also. As I said earlier, if I start PUNTER IB, 10/10 would say PUNTER IB > AmInvest (bungkus IB what you expect)
Kimlun’s manufacturing orders expected to accelerate
Kimlun Corp Bhd (Aug 19, RM1.23)
Maintain buy with an unchanged target price (TP) of RM2.16: As we move into the fourth quarter of 2019 and the forecast financial year 2020 (FY20F), we believe that Kimlun Corp Bhd’s manufacturing orders will accelerate. These orders will initially flow from Singapore and eventually Malaysia when some key projects are rolled out.
Its total manufacturing tender book is now at RM500 million which is largely skewed towards projects in Singapore, including Industrialised Building System (IBS) related jobs and Deep Tunnel Sewerage System 2. This does not include orders from the North South Corridor Expressway and Jurong Region Line.
Our FY19F earnings estimates are above consensus. Our forecast of a surge in manufacturing flows from Singapore is intact, with local construction wins likely to come in at the higher end of this forecast. Not enough recognition is given to Kimlun’s high-margin manufacturing business which should command a scarcity premium. Its IBS expertise will be crucial in clinching more local affordable housing projects.
Given its depressed valuations, incremental new orders for Kimlun’s construction and manufacturing segments beyond its total order book of RM2 billion would lift the stock. With its strategically located manufacturing plants in Negeri Sembilan and Johor, we believe it will be the front runner for the Tunnel Lining Segment and Segmental Box Girders portions of major transportation and infrastructure projects when they eventually kick off.
Our TP is set at RM2.16, based on sum-of-parts valuation. We think this better reflects Kimlun’s underlying business model. Its construction business is valued at RM1.62 a share with its manufacturing unit at 54 sen a share.
Low-margin wins is a major risk. The biggest risk is its perceived over-reliance on projects in Johor. This is mitigated by its stringent bidding process, only accepting projects with strong marketability. — AllianceDBS Research, Aug 19
The Group has an estimated construction and manufacturing balance order book of approximately RM1.7 billion and RM0.3 billion respectively as at 31 March 2019, contributed by numerous construction contracts and supply contracts. The Board is positive of the performance of the Group in 2019 as the balance order book is expected to support the Group’s performance in 2019. Our on-going projects and sales orders comprises of contracts secured from, amongst other, Lebuhraya Borneo Utara Sdn Bhd, MMC Gamuda KVMRT (UGW) Joint Venture, UEM Sunrise Bhd Group, Sunway Iskandar Sdn Bhd, Hillcrest Gardens Sdn Bhd and China Railway First Group Co.Ltd. Our on-going projects and sales orders include the following:
Kimlun sees tough conditions in construction market persisting
CONSTRUCTION companies such as Kimlun Corp Bhd are waiting with bated breath to see what goodies will be announced in the upcoming Budget 2020 and are hoping the government will pump-prime the economy with public infrastructure projects which, in turn, could help turn their fortunes around.
“A recovery in the construction sector next year will depend on the upcoming Budget 2020 — what the government has in mind to boost the sector. If the government does not do anything, the country may sink into recession. As a businessman, I would not be optimistic [about a recovery] if the government continues to tighten its belt,” Kimlun CEO and executive director Sim Tian Liang tells The Edge in an interview.
The national budget for next year will be tabled in Parliament on Oct 11.
On its part, Kimlun — which has seen its earnings tumble for two straight years since the financial year ended Dec 31, 2017 (FY2017) — does not expect the declining trend to reverse course in the current financial year given the slowdown in construction projects.
Sim, 64, says net profit for FY2019 is likely to be flat or lower than last year’s on fewer construction jobs.
This is despite the group posting a 30.6% year-on-year increase in net profit to RM29.38 million for the first half ended June 30, 2019 (1HFY2019). Revenue rose 46.7% y-o-y to RM643.72 million, it said in a bourse filing last Thursday. The improved 1HFY2019 performance was mainly due to higher revenue achieved by the construction and manufacturing and trading (M&T) divisions.
Sim’s cautious outlook stems from his view that the worst is not over for the construction sector. He notes a turnaround is only expected in two to three years. The construction segment is the main contributor to the group’s revenue.
He says the recovery of the property market, meanwhile, will depend on how fast unsold properties that have been built are absorbed, although he expects that sector to take longer to rebound than the construction industry.
“The slowdown in the market is deterring a lot of developers from launching new properties. However, property development constitutes a small portion of our overall revenue. Our main business is still construction,” he adds.
Kimlun saw a 16% y-o-y drop in net profit to RM68.48 million in FY2017, which fell further by 11% y-o-y to RM61.14 million in FY2018.
However, revenue rose 2.7% y-o-y to RM1.01 billion in FY2018. Of the sum, the construction segment contributed 79.16%, the M&T business accounted for 20.38% and only 0.46% came from the property development segment.
The group has an outstanding order book of RM2 billion as at June 30, which provides earnings visibility for the next two years, says Sim. Of this, RM1.7 billion is from construction contracts and RM300 million from the manufacturing segment.
This year, the construction projects that will contribute to the group’s results include the Pan Borneo Highway Sarawak Project (Serian Roundabout to Pantu Junction); office complex for Majlis Bandaraya Johor Baru; condominiums and ancillary buildings at Mukim Petaling, Selangor, for the Kuok Brothers Sdn Bhd group; and building works for one block of commercial building and one block of apartments at Medini Iskandar, Johor, for Sunway Iskandar Sdn Bhd.
Sim says the group has set a lower order book replenishment target for FY2019 of RM500 million, of which RM400 million is expected to come from construction and RM100 million from manufacturing. Year to date, Kimlun has secured construction jobs worth RM250 million and new manufacturing sales orders of RM40 million.
“This year’s target is lower than our previous years’ targets of between RM600 million and RM800 million, taking into account current market conditions,” he adds.
Kimlun is one of 1,321 construction firms nationwide that are reported to have submitted their interest to participate in the RM44 billion East Coast Rail Link project during the pre-qualification exercise on May 29 and 30.
Sim says the group is also eyeing opportunities in projects such as the Johor Baru-Singapore Rapid Transit System Link; the Ministry of Housing and Local Government’s plan to build 100,000 affordable homes per year; the Penang Transport Master Plan, which envisions a series of highways and light rail transit lines; the construction of the Kulim International Airport; upgrading works on the North-South Highway; the second phase of the Pan Borneo Highway construction works; the Sarawak coastal highway; and the second phase of the Klang Valley Double Track rehabilitation works.
Meanwhile, Kimlun expects the precast concrete product manufacturing segment to bring in stable income for the group, through its subsidiary SPC Industries Sdn Bhd, going forward.
SPC has a strong track record in supplying precast concrete components to various projects in Singapore since 2006, including mass rapid transit, underground cable tunnel and sewerage system projects, and is well positioned to compete for potential sales orders from the expansion of the rail network in the city state.
“The advantage of SPC is that it has another market in Singapore, which should provide more consistent jobs than Malaysia [amid the current slowdown in the construction sector]. The Singapore market should sustain SPC’s [premix production] operations in Johor,” says Sim.
Still, he points out that sales orders from Singapore only contribute about 10% to 15% to the group’s profit.
Sim says the group has no plan to make any cash call until the market improves, adding that if it were to raise capital from the market, it would be used for property development.
Kimlun’s cash balance stood at RM56.8 million as at June 30 while total borrowings were at RM351.5 million, resulting in net debt of RM294.7 million.
Nevertheless, Sim says the group is in no hurry to develop its existing land bank, totalling 204 acres, and is not planning any new launches until sentiment in the property market improves.
While Kimlun does not have a dividend policy, Sim says the group aims to pay out yearly dividends to shareholders as long as it makes money. It has had an average dividend payout ratio of 24.9% since its listing in 2010.
Bloomberg data shows that of the six analysts covering Kimlun, two rated it a “buy”, three, a “hold” and one, a “sell”. Their average target price is RM1.52 over the next 12 months. The stock closed at RM1.26 last Thursday, giving the company a market capitalisation of RM428.17 million. Year to date, its share price has risen 12% from RM1.13.
Maintain BUY, TP: RM1.58. Maintain BUY rating with unchanged TP of RM1.58. TP is pegged to 8x FY19 earnings. We like Kimlun for its execution capability and undemanding valuations. The stock is trading at 6.3x PE multiple on FY19 earnings, represents -1.6SD below 5 years historical average.
Good fundamental and profit, Kimlun share price records 10 years low, RM0.87. It is time for Kimlun to buy back its own share. So strange, very few investors and speculators want to buy Kimlun share despite fund managers' target price are higher.
now alot of stocks also "looks cheap"... but now people worry they will go cheaper and cheaper and cheaper and cheaper and cheaper and cheaper and cheaper.................. and cheaper.
Kimlun’s manufacturing orders expected to accelerate
(The Edge Financial Daily / August 20, 2019 12:26 pm +08)
Kimlun Corp Bhd (Aug 19, RM1.23)
Maintain buy with an unchanged target price (TP) of RM2.16: As we move into the fourth quarter of 2019 and the forecast financial year 2020 (FY20F), we believe that Kimlun Corp Bhd’s manufacturing orders will accelerate. These orders will initially flow from Singapore and eventually Malaysia when some key projects are rolled out.
Its total manufacturing tender book is now at RM500 million which is largely skewed towards projects in Singapore, including Industrialised Building System (IBS) related jobs and Deep Tunnel Sewerage System 2. This does not include orders from the North South Corridor Expressway and Jurong Region Line.
Our FY19F earnings estimates are above consensus. Our forecast of a surge in manufacturing flows from Singapore is intact, with local construction wins likely to come in at the higher end of this forecast. Not enough recognition is given to Kimlun’s high-margin manufacturing business which should command a scarcity premium. Its IBS expertise will be crucial in clinching more local affordable housing projects.
Given its depressed valuations, incremental new orders for Kimlun’s construction and manufacturing segments beyond its total order book of RM2 billion would lift the stock. With its strategically located manufacturing plants in Negeri Sembilan and Johor, we believe it will be the front runner for the Tunnel Lining Segment and Segmental Box Girders portions of major transportation and infrastructure projects when they eventually kick off.
Our TP is set at RM2.16, based on sum-of-parts valuation. We think this better reflects Kimlun’s underlying business model. Its construction business is valued at RM1.62 a share with its manufacturing unit at 54 sen a share.
Low-margin wins is a major risk. The biggest risk is its perceived over-reliance on projects in Johor. This is mitigated by its stringent bidding process, only accepting projects with strong marketability. — AllianceDBS Research, Aug 19
Construction OVERWEIGHT Waiting for Green Shoots By Goh Yin Fool gohyf@kenanga.com.my
A cloud of uncertainties emanating from a gloomy economic backdrop has blurred the construction sector outlook. In essence, sentiment on construction stocks will remain under siege from the Covid-19 spill-over effects and possible delays in the revival of mega infrastructure projects. The KL CON Index reacted by falling 37.2% YTD (until 20 March 2020),thus reversing last year’s gain of 34.2%.With investor confidence battered badly and given poor earnings visibility, we have switched our valuation methodology to PBV. During the 2008/2009 Global Financial Crisis(GFC), the construction sector was then trading between –2SDand –1SD below the historical PBV mean for approximately three months. In comparison, the KL CON Index is currently trading at -2SD below its mean, suggesting limited downside risks.After attaching basement PBV multiples at -2.5SD and -1.0SD below their mean levels, our revised target prices indicate positive returns to be made by investors in the medium term as valuations are expected to revert to normalcy post-crisis. From a fundamental perspective, our top stock picks are GAMUDA(OP; TP:RM3.18), SUNCON(OP; TP:RM1.80)and HSL(OP;TP:RM1.37). In addition, trading-oriented investors can consider WCT(OP; TP:RM0.47) and KIMLUN(OP; TP:RM1.25) as potential rebound plays from oversold territories. Upgrade sector call to tactical OVERWEIGHT on valuation grounds.
Projects worth more than RM16 bil in Sarawak continue during CMCO
(Bernama / May 07, 2020 01:20 am +08)
KUCHING (May 6): The Sarawak Disaster Management Committee (SDMC) has identified 101 projects worth RM16.828 billion on which works have continued during the Conditional Movement Control Order (CMCO) period.
Its chairman Datuk Amar Douglas Uggah Embas said of the total, 42 projects costing about RM16.6 billion involved allocations from the State Government, Federal Government, people's projects and alternative funds.
"These projects have been identified and filtered by a special task force for the green zones headed by State Secretary Datuk Amar Jaul Samion," he said at a press conference here today.
According to Uggah, another 59 Rural Transformation Projects (RTPs) worth RM22.8 million have been identified for continued implementation during CMCO, and one of the requirements is that the projects must be in green zones.
As of now, 28 of the 40 districts in the State are in green zones.
Uggah, who is also Deputy Chief Minister, said the SDMC imposed several conditions for works on these projects to continue, including the fact that the projects must be located in green districts and should not involve the entry of workers, building materials and machinery from outside the green zone.
Furthermore consistent dividend payout since listed at Bursa (started from Jun 2010)......
YE 2019 = 3.30 sen (expected pay around June 2020 based on past record)
YE 2018 = 3.70 sen
YE 2017 = 5.50 sen
YE 2016 = 6.50 sen
YE 2015 = 5.80 sen
YE 2014 = 3.80 sen
YE 2013 = 3.00 sen
YE 2012 = 4.80 sen
YE 2011 = 5.10 sen
YE 2010 = 4.80 sen
** Total payout dividend for 10 years are RM 0.463, equivalent to 4.63 sen per year......
^^Average gross dividend yield by 6.76% based on yesterday closing price......
##Based on construction sector, hard to search any small cap construction stock able to produce such high dividend yield with past 10 years consistent payout......
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....
paperplane
21,617 posts
Posted by paperplane > 2019-04-30 07:34 | Report Abuse
Not bad. 2H2019 will be even better. Hope for best