Kenanga Research has maintained its OUTPERFORM call on Kelington Group Bhd (KGB) after the engineering services group secured its largest-ever contract, a US$452 million, or about RM1.83 billion, award for a semiconductor wafer fabrication plant in Gujarat, India.
The contract covers turnkey total facility ultra-high-purity tool hookup services, with KGB appointed as the main contractor for the design, installation, connection, testing and handover of manufacturing, laboratory and support tools across Modules 1 and 2.
The project covers up to 886 tools and is scheduled to run for 30 months, with completion targeted by February 2029.
The provisional contract value comprises about US$249.9 million, or RM1.01 billion, for Module 1 and US$202.0 million, or RM817 million, for Module 2. The final value will depend on the actual quantities of tools and services executed.
Kenanga said the award provides a significant uplift to KGB’s outstanding workload and should support earnings growth through FY2027 to FY2029.
Assuming relatively even execution over the 30-month period, the research house estimated that the contract could theoretically contribute around RM730 million in annualised revenue at full run-rate, although actual revenue recognition will depend on project progress and milestone completion.
Kenanga said KGB’s appointment as the main contractor also marks a step-up in its positioning within India’s semiconductor supply chain and could improve its chances of securing further work as India accelerates the development of its domestic semiconductor manufacturing industry.
Including the latest award, KGB’s year-to-date 2026 new contract wins have reached RM3.59 billion, comprising RM1.23 billion secured in the first half, RM538 million in July and August, and the latest RM1.83 billion contract.
The research house consequently raised its FY2026 new contract win assumption to RM4.0 billion from RM2.1 billion previously.
However, Kenanga left its earnings forecasts unchanged as the larger contracts will be executed over two to three years, with a meaningful portion of earnings contribution expected to fall beyond its current forecast period.
Kenanga also maintained its target price at RM10.10, based on an unchanged FY2027 price-earnings multiple of 37 times, representing a 10% discount to the average valuation of local semiconductor front-end peers UWC, Frontken and ViTrox.
The research house said its positive view on KGB is supported by the group’s direct exposure to wafer fab expansion, an outstanding order book of more than RM3 billion, a tender book exceeding RM7 billion, its presence across Malaysia, Singapore and India, and expectations of progressive margin expansion.
