Kelington’s Bounties To Come From The Industrial Gas Sector

Kelington Group Bhd is poised to benefit immensely from the industrial gas sector that has grown phenomenally on the back of the demand from the semiconductor and oil and gas sectors, its chief executive officer Ir Raymond Gan told Business Today.

He said that given the higher barrier of entry due to the high CAPEX requirements and complex technical know-how involved in this business, there are few market players in the industry.

“The revenue from this sector RM8 million in FY2019 to RM24 million in the nine months ended 30 September 2021 (9M2021).

Tracing the history of the sector, Gan said that vast growth potential to be tapped in the local market before expanding overseas. “However, we do not rule out the possibility to expand overseas in the future should business opportunities arise.

“As this business segment is still relatively nascent, it will remain our fastest-growing revenue contributor in the coming years and further diversify our business portfolio,” it said.

He said that this sector has performed well and contributed positively to the Group in recent years. “We commenced manufacturing of liquid CO2 in October 2019, and within three years, the plant is now running at a utilisation rate of 60% and continues to trend upwards,” he said.

Gan said that the demand for its offerings to remain robust in 2022 as semiconductor players are accelerating their expansion plans to address the prevailing chips shortage.

Just recently in December 2021, one of the world’s largest chip manufacturers headquartered in the US has earmarked approximately RM30 billion in Malaysia to expand its advanced manufacturing capabilities.

He said that with large-scale investments by various industry players around the world, we are well-poised to capture more business opportunities in our key operating markets in Malaysia, Singapore, and China, leveraging on our extensive experience and robust track record in the industry.

On its order books and the number of contracts that it is bidding for, he said that during the year the group secured new projects totalling RM1.184 billion, which is an all-time high record for us

Analysts have chimed in to say that they remain buoyant on the stock on the back of its order-book replenishment that has exceeded its expectations with a “Buy” recommendation.

Gan said that as of the end of December 2021, our outstanding order book stood at RM1.225 billion. As we focus on executing these projects promptly, we are also tendering for projects worth approximately RM1.0 billion from renowned global players in the semiconductor industry.

He said that the group was optimistic that the order book will remain at the current level or edge slightly higher throughout 2022 on the back of healthy order book replenishment as well as projects completed during the year.

In terms of revenue contribution, Gan said that its revenue contribution was across our key operating markets in Malaysia, China, and Singapore are evenly spread out.

“We continue to secure new projects across these countries as global semiconductor players roll out new wafer fab capacities in these locations,” he said

Going forward, he said it was optimistic of the future as its strong technical capability and track record in clinching projects from the global semiconductor leaders.

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