Kenanga keeps 'underperform' call on Kimlun

KUALA LUMPUR: Kenanga Research is maintaining its 'underperform' rating on Kimlun Corp Bhd shares with an unchanged target price of RM1.55 per share.

According to Kenanga, Kimlun said that its wholly-owned unit, SPC Industries was awarded a RM51.3 million contract from Shanghai Tunnel
Engineering Co Ltd for the supply and delivery of precast concrete segments (TLS) to Contract T206, Thomson Line of the Singapore MRT (SMRT) system.

The contract supply of the TLS is expected to spread over a period of about 36 months.

The research house is neutral on the contract win as it makes up part of the Kenanga's financial year 2014 manufacturing orderbook replenishment estimate of RM200 million.

Kenanga added that the Kimlun's management said that the upcoming Thomson Line and the Eastern Region Line comprise a total length of 51km, and the total TLS requirement for this line is estimated at RM338.06 million.

"Similar projects could be awarded to Kimlun in the later part of the year, based on its experience and good track record for the ongoing Downtown
Line," Kenanga said in a research note.

Going forward the new contract win has further increased Kimlun's total outstanding orderbook closer to RM2.3 billion, providing earnings visibility for the next two years.

Kenanga noted that earnings in the property division should rise in financial year 2014, thanks to its strong unbilled sales of RM125 million from its Cyberjaya property development job called The Hyve.

The research firm has kept its core earnings forecast on Kimlun for financial year 2014 at RM51.6 million as the value of the job is well within its orderbook replenishment estimates.