KGB recently announced that it had secured an RM102m contract from a US client to supply a customised chemical delivery system for a new manufacturing facility in Singapore, marking its first customised chemical delivery system built and assembled in-house. The company led by CEO Raymond Gan said the contracts were awarded by a global leader in high-tech filtration, separation, and purification. Its filtration solutions are used across a wide range of industries, including semiconductor, biopharmaceuticals, food and beverage, energy, industrial, and aerospace. The latest contract has boosted its YTD job wins to RM596m, lifting its outstanding order book to RM2.23b which will keep it busy for the next two years.
The customer specialises in high-tech filtration solutions that are used in various industries such as semiconductors, biopharmaceutical, F&B, and aerospace. This contract is rather significant in terms of brand recognition as it marks KGB’s first chemical delivery system and is fully built and assembled in-house from its subsidiary — KE Systems Integration (Chuzhou) Co., Ltd — in China which has its own cleanroom and fabrication facility. Kenanga points out, having such in-house capability coupled with the validation of a prominent US client, is expected to further elevate the group’s value proposition in the industry.
Following the win of this recent award, the group’s year-to-date order replenishment now stands at RM596m which is highly promising given that it is just 4 months into FY23. With a strong tender book of RM2b, we are sanguine that the group is on track to achieve RM1b replenishment for the year. Also, its current outstanding order book, which includes projects carried
forward from the prior year, has grown to RM2.23b which provides solid earnings visibility for the next two years.
In this respect, Kenanga maintained its forecast for the group as it already assumed job wins of RM1b for FY23F. The house also keeps its TP of RM1.92 based on an unchanged 22x FY23F PER, in line with its peers’ forward average. The sector’s forward PER is the average of regional peers, i.e. PNC Process Systems and Linde. KGB is liked for: (i) it is a direct proxy to the frontend wafer fab expansion, (ii) its strong earnings visibility underpinned by robust order book and tender book exceeding RM1b, and (iii) its strong foothold in multiple markets, i.e. Malaysia, Singapore and China.
