Kenanga Research said the company’s outlook remains promising.
PETALING JAYA: Kelington Group Bhd
(KGB) appears to be a key beneficiary of the anticipated recovery in semiconductor demand in 2024 and beyond.
Kenanga Research said the company’s outlook remains promising, supported by a robust order book primarily consisting of high-margin ultra-high purity (UHP) gas projects.
The research house raised its financial year 2024 (FY24)/FY25 net profit forecast by 4% and 2%, respectively, after incorporating the latest quarterly results and increasing its FY24 new order assumptions by RM200mil to RM1.2bil.
It raised its target price to RM4.16 from RM4.10 a share and maintained its “outperform’’ call on the stock.
Its valuation represents a 10% discount to its peers’ forward mean price earnings ratio of 24 times, which includes global players such as Air Products, Air Liquide and Linde.
KGB’s LCO2 or liquid carbon dioxide plants are operating at 58% capacity, with utilisation expected to increase due to strong regional demand.
Recently, the group secured additional UHP gas contracts worth RM413mil, mostly from Malaysia and Singapore, bringing its year-to-date secured contract value to RM977mil as of early September.
It said KGB continues to see a higher proportion of UHP gas solution jobs in its pipeline, making up about 76% (versus 74% in FY23) of its RM1.29bil outstanding order book as of the end of the first half of FY24.
Its tender book remains significant at RM1.66bil, predominantly from potential jobs from Singapore, China, Germany and Hong Kong.
