KUALA LUMPUR (April 11): AmInvestment Bank Research has maintained "hold" on Kimlun Corp Bhd at 79 sen with a higher fair value (FV) of 88 sen based on nine times earnings per share (EPS) for the financial year ending Dec 31, 2023 (FY23), in line with its benchmark forward target price-earnings (P/E) of nine times for small-cap construction stocks.

In a note on Monday (April 11), the research house said there was no FV adjustment over enviromental, social and governance (ESG) concerns based on a three-star rating.

AmInvestment said following a briefing during the weekend, it raised its FY22 net profit forecast for Kimlun by 19% and FY23 by 4%, underpinned by a stronger order book of RM2.1 billion as at end-FY21 (against RM1.4 billion as at end-FY20) amid improved earnings visibility for the construction sector. 

It said the group’s earnings outlook is expected to brighten for FY22 on the back of unbilled progress billings from projects secured in FY21.

“The group said that rising building material costs thus far had not affected it much as most of the older projects that it is working on had already passed the steel and concrete intensive stage, i.e. the structural stage.

“Meanwhile, for new projects secured, the rising building material costs have already been factored in.

“The reopening of Singapore also bodes well for Kimlun as construction activities are normalising and labour shortage issues are being resolved,” it said.

At 9.25am on Monday, Kimlun was trading at 79 sen, giving it a market capitalisation of RM279.17 million.