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KGB (0151): KELINGTON GROUP BHD to post 77pct more revenue in FY22?

Kelington Group Bhd’s revenue is expected to grow 77 per cent year-on-year (YoY) in its financial year 2022 supported by its record high order book.

KUALA LUMPUR: Kelington Group Bhd's revenue is expected to grow 77 per cent year-on-year (YoY) in its financial year 2022 supported by its record high order book.

Affin Hwang Capital said it had raised its 2021-2022 earnings forecasts by 19-20 per cent after lifting its revenue forecasts to impute higher order book replenishment wins.

"We expect 2022 revenue to grow 77 per cent YoU, predominantly driven by the sizable turnkey contract in hand.

"Assuming no turnkey size contracts beyond this, we expect 2023 earning revenue to decline by 35 per cent and revert to its usual RM500 million-RM600 million revenue, assuming an annual contract replenishment rate of RM400 million," it said.

Affin Hwang said Kelinton has been on a winning streak over the past two months, securing a slew of new contracts with a record high order book replenishment since its listing in 2009.

Notably, it said Kelington had clinched a total of three contracts from a global leading semiconductor manufacturer for its new fab in Singapore relating to the supply and installation of abatement, specialty and bulk gas systems.

"It has also clinched its maiden turnkey contract for the refurbishment and construction of a new facility in Kuching, Sarawak from a global data storage devices and solutions leader.

"This marks Kelington's largest contract secured, valued at RM420 million.

"This makes up 50 per cent of its year-to-date contract wins. As a result, Kelington's current order book is at its record high of RM979 million, increasing by 2.7 fold as compared to end December 2020," it said.

The firm said Kelington wouldfocus on executing its turnkey contract in Sarawak which constitutes 42 per cent of its current order book.

Elsewhere, it said the company's work progress in China had been uninterrupted despite the recent energy crunch issue.

"We gather that Kelington's operations in China (which make up 16 per cent of its current order book) has been unaffected despite the limitations.

"All of its projects are progressing well and on track to meet their completion timelines," it said.

Meanwhile, Affin Hwang said Kelington's liquid carbon dioxide plant had seen better-than-expected demand following the economy reopening, leading the firm to revise its earlier utilisation rate forecast higher.

The project execution of its recently-awarded construction contract in Sarawak, Malaysia will be Kelington's key priority in 2022 earning its maiden turnkey award.

"In terms of new contracts bidding, Kelington may focus more of its attention towards the China and Singapore regions for more Ultra High Purity contract opportunities.

"We downgrade our rating to 'Hold' on valuation grounds and lift our target price to RM1.81," it added.


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