Kimlun New Contract Wins Likely To Fetch Gross Profit Margin Of 7-9%: Kenanga

Kimlun Corporation (KIMLUN) has bagged two new jobs in Johor worth RM94.5 million from Horizon Hills Development to construct 78 units of shop lots, and a shopping mall. These projects are slated for completion by quarter two calendar year 2025, said Kenanga Research (Kenanga) in the recent Company Update Report.

Kenanga is positive on the new contracts which have increased its year-to-date job wins to RM360 million and boosted its outstanding order book by 5% to RM2 billion, inching closer to the peak of RM2.4 billion during the last upcycle in 2017.

“We estimate that the contracts will fetch a gross profit margin of 7-9%,” said Kenanga.

For the rest of the year, Kenanga maintains the view that public contracts would see an expedited rollout in the second half calendar year 2024 post reviews.

Kenanga believes KIMLUN stands to benefit from certain key infrastructure projects, for example the Pan Borneo project, Sarawak Autonomous Rapid Transit, Johor Bahru – Singapore RTS project, and MRT3.

“We like KIMLUN for being a beneficiary from the continuation of public infra project rollouts, its geographically diversified earnings
base with a strong presence in the precast concrete product segment in Singapore, and its strong earnings visibility backed by an
outstanding order-book of RM2 billion which could keep it busy for the next two years,” said Kenanga.

Risks identified by Kenanga include sustained weak flows of construction jobs from both public and private sectors, project cost overrun and liabilities arising from liquidated ascertained damages and rising cost of building materials.

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