KKB Engineering Bhd has retained a ‘buy’ call with a higher target price on the count of its ability to sustain performance, said a local research house.
“With a steady pipeline of jobs premised on its outstanding order book of more than RM500 million, we opine that KKB would be able to sustain its performance, at least over the next few quarters,” according to MIDF Research in a note released today (Nov 22).
It also expected the group to be among the beneficiaries of the various development plans that are in store for Sarawak, backed by the allocations and initiatives under Budget 2024 and the Mid-Term Review of the 12th Malaysia Plan.
It has raised its 52-target price to RM1.77, up 19 sen from RM1.58. The stock was trading at RM1.42 at 10.20am today.
The research house said the KKB registered a core net profit of RM9.7 million for the 2QFY23, more than triple the amount in the same quarter last year, driven by stronger steel fabrication jobs.
For the cumulative 9MFY23, the group locked in a core net profit of RM22.7 million, exceeding its and consensus expectations, making up 90.1% and 85.3% respectively of full-year estimates.
It said KKB’s outstanding orderbook stands at north of RM500 million, with earnings visibility up to FY24.
“Management guided that they are actively participating in tenders, with a current tender book level of more than RM260 million. The group expects the upcoming FY24 to be driven by oil and gas-related projects and water piping project,” it said.
MIDZf Research raised the company’s earnings estimates for FY23E- FY25F by 12.0%-16.7% to RM29.1 million-RM31.6 million to account for the stronger-than-expected performance, especially from steel fabrication jobs.
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