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KIMLUN: Construction Firm Exceeds Expectations on Robust Performance, Forecasts Upgraded
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Hong Leong Investment Bank (HLIB) has maintained its “BUY” recommendation for a construction and precast concrete solutions provider, following a robust second quarter and an upgrade to its target price. The company’s 2QFY25 results significantly exceeded expectations, driven by strong operational performance and a healthy pipeline of projects.
Strong Q2 Performance
The company reported a substantial earnings beat for 2QFY25, with revenue surging to RM432.2 million, a 53.1% year-on-year increase. This robust performance contributed to a 1H25 core profit after tax and minority interests (PATAMI) of RM49.3 million, materially ahead of analysts’ expectations. The strong showing was primarily attributed to vigorous contributions from its construction and precast divisions, alongside accelerated billing from key property developments, notably Pinegate Phase 1.
Positive Outlook and Forecast Upgrades
Looking ahead, the company boasts a record-high orderbook of approximately RM3.4 billion, which includes RM2.76 billion in unbilled construction backlog. This represents about 2.8 times its FY24 construction revenue, ensuring strong earnings visibility well into the future. Management is strategically targeting new contract wins of RM1.5 billion to RM2.0 billion, which is expected to bolster both top-line growth and margin expansion through FY25-26.
Operationally, the precast capacity is currently running at near full utilisation following recent expansions. Further visibility is provided by its property developments, with Arden JB showing a Gross Development Value (GDV) of RM800 million, and Pinegate Phase 1 achieving approximately 78% completion and an 80% take-up rate.
Factoring in this positive earnings momentum and enhanced visibility, HLIB has revised its core PATAMI forecasts upwards for FY25, FY26, and FY27 by +29.6%, +23.9%, and +14.0% respectively. Consequently, HLIB has upgraded its target price to RM1.67, reiterating its confidence in the company’s future prospects.
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