Quick take: Kelington rises 9.7% on RM420mil contract win

KUALA LUMPUR: Shares in Kelington Group Bhd rose almost 10% in early trade Wednesday after securing a construction contract worth RM420mil in Sarawak.

The engineering services company rose 9.72%, or 14 sen to RM1.58 at 9.14am. Year-to-date, the counter has risen 88.7%. Kelington-WB jumped 29.21%, or 13 sen to 57.5 sen.

Kelington’s wholly-owned subsidiary, Kelington Technologies Sdn Bhd (KTSB) has bagged a construction contract worth RM420mil from a manufacturing company in Kuching, Sarawak.

It said the manufacturing company, which is located at the Sama Jaya Free Industrial Zone, is owned by a United States-based multinational company, a world-leading developer, manufacturer and provider of data storage devices and solutions.

Kenanga Research said inclusive of this recent win, Kelington has secured a record-breaking RM764mil (vs. FY19 of RM490mil) new job wins in 2021, exceeding its expectation of RM500mil.

“Meanwhile, its outstanding order-book has ballooned to another all-time high of RM822mil, which is more than double of FY20 revenue.

“Interestingly, its order-book has grown very close to its current market capitalisation,” it said.

“Reiterating our positive view, we expect more fab expansion to come and KGB is in a favourable position to benefit from more UHP jobs, with the management showing no signs of slowing down in terms of securing new jobs. The group’s tender-book remains elevated at RM1.1bil,” it added.

Kenanga raised FY21E-22E earnings by 4% and 33% to RM32.3mil and RM47.0mil, representing growth of 85% and 46%, respectively.

It added that Kelington remained its top hidden gem pick owing to its healthy job pipeline and secular growth story.

It has maintained an “outperform” with a higher target price of RM2.50.