Company Background. Kelington Group (KGB) is one of the leading providers of ultra-high purity gas and chemical delivery solutions for high technology industry. The group also provides integrated engineering services such as end-to-end turnkey services from the initial design works to fabrication and maintenance services. In addition, KGB has an Industrial Gases division, mainly providing on-site gas supply as well as involved in manufacturing and trading of industrial and specialty gases.

Prospects. (i) Healthy orderbook replenishment rate across the Ultra High Purity, Process Engineering, and General Contracting segments. As at 30 Sep 2022, KGB’s total orderbook stood at RM2.4bil, of which RM1.6bil remains outstanding. (ii) Industrial Gases division remains positive as demand for liquid carbon dioxide (LCO2) increases in tandem with the recovery in economic activities. (iii) Successfully penetrated into a new geographical region, namely Oceania countries, for the sale of liquid carbon dioxide.

Financial Performance. In 9MFY22, KGB reported revenue of RM852mil (+1.5x YoY) with a PAT of RM38.8mil (+81.4% YoY). This was mainly driven by strong orders secured across the Ultra High Purity and General Contracting segments as well as the increase in demand for industrial gases.

Technical Analysis. KGB may trend higher after it broke above the RM1.60 resistance and hit a new 52-week high 2 sessions ago. As the stock also broke out of the 4-week bullish rectangle pattern, it may see additional strength in the near term. A bullish bias may emerge above the RM1.60 level, with a stop-loss set at RM1.48, below the 50-day EMA. Towards the upside, the near-term resistance level is seen at RM1.80, followed by RM2.00.

Source: AmInvest Research - 13 Feb 2023