Chloe Tai Blog

Kelington Group Berhad (KGB): a Rising Dragon in 2024

ChloeTai
Publish date: Fri, 29 Dec 2023, 09:31 AM
ChloeTai
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This is my blog.



Kelington Group Berhad (KGB) produces ultra-high

purity (UHP) which includes liquid carbon dioxide. 

Basically, the company is not a semiconductor technology company.

Its main business is providing ultra-high

purity (UHP) gas delivery systems to semiconductor

customers, providing process engineering and general

contracting services, and also dabbling in industrial gases.

KGB is engaged in the businesses of providing engineering services, construction and general trading. The Company provides Ultra High Purity (UHP) Gas and Chemical Delivery Solutions. The Company's products and technologies include Gas and Chemical Delivery Equipment, Orbital Welding, Modeling and Simulation Technology, UHP Certification and Commissioning Technology, Gas and Chemical Purification and Abatement Technology, and Metallurgical Knowledge. The Company offers a range of services, including design and modeling, fabrication and installation, quality testing and certification, control and instrumentation, and maintenance and servicing. Its subsidiaries are engaged in trading of machinery equipment and related parts and components; provision of engineering and consultancy services; provision of scientific and technical researches, laboratory testing service and experiments, and supply of fabricated steel structure and mechanical electrical works.

Price: RM2.15 (28 December 2023) [KGB-WB: RM0.78]

P/E: 15.2

Div Yield: Q2 : 1.45% (1.5 sen), Q4 : ?

Net profit (RM,000): Q1 : 16,188, Q2 : 19,064, Q3 : 31,668, Q4: ?

EPS: Q1 : 2.52 sen, Q2 : 2.96 sen, Q3 : 4.91 sen, Q4: ?

Analyst rating: Strong buy

KGB may be the only local listed company

that provides such services to semiconductor

companies.

This is a very special industrial company.

Liquid carbon dioxide is used

(a) when cleaning the chips while  when cleaning the chips while they are being sawed apart from the base wafer after transistor manufacturing

(b) to provide a protective atmosphere around semiconductor components, thus shielding them from the harmful effects of moisture, oxygen and other contaminants in our atmosphere. It can be compared to the blood vessels and veins of the human body. Our blood vessels and veins carry blood throughout the body. Ultrahigh pressure is like those blood vessels and veins, but its function is to avoid product contamination.

(c) for freezing and chilling of food products; carbonation of beverages; water treatment; low temperature testing of aviation and electronic components; oil and gas well stimulations; and controlling chemical reactions.

As of September 30, 2023, the company's order book holdings totaled RM1.51 billion, equivalent to 1.2 times its fiscal year 2022 revenue. Among them, 68% of orders come from the UHP (ultra-high purity) field.

KGB is a listed company related to semiconductors that has achieved impressive results. Its performance in the first nine months of fiscal year 2023 (ending September 30) exceeded market expectations, with cumulative revenue soaring 33.3%. This was due to strong project delivery. 

As the semiconductor industry recovers, UHP orders are expected to grow. According to SEMI (which brings together more than 2,500 corporate members and 1.3 million professionals around the world to promote the development of electronic design and manufacturing technology and business), strong demand for high-performance computing, automotive applications, and increasing memory demand will drive the next 3 years Double-digit growth in equipment investment. After an expected 18% decline to US$74 billion (RM345.6 billion) this year, global 300mm fab equipment spending is expected to rise 12% in 2024 to US$82 billion (RM382.9 billion) and rise 24% in 2025 to US$101.9 billion (RM475.9 billion), and rise 17% to US$118.8 billion (RM554.8 billion) in 2026.

Taking into account the global economic recovery and the increased demand for liquid carbon dioxide (LCO2) in Oceania, as well as the new plant being put into operation by the end of the year, the industrial gas sector will be the second largest growth driver. Liquid carbon dioxide is carbon dioxide gas that is highly compressed and cooled into a liquid state. This expansion may make KGB the largest liquid carbon dioxide producer in Malaysia! As of September 2023, 74% of liquid carbon dioxide is exported overseas. Export markets include Singapore (the largest market), Malaysia, Australia, New Zealand, Fiji, Indonesia and the Philippines.

From a valuation perspective, the stock's current

forward PE ratio is 15.2 times, which is lower than

the average price-to-earnings ratio of 20 times over

the past five years. The valuation is relatively

low. Current share price levels are attractive

to investors.

KGB is the only UHP gas supplier listed on the

Bursa Malaysia. Competitors include

Dynamic High Purity Engineering Sdn Bhd

and KINETICS Systems Malaysia Bhd.

Judging from the monthly chart, KGB stock price has been quiet for a long time, but after delivering outstanding performance, it finally broke out on November 23 this year, breaking through the triangle pattern, and the trading volume was very active.

To predict the price target for a triangle

pattern, we first measure the width of the

triangle pattern, which is the distance from

the bottom to the highest point.

Subsequently, we identified the breaking point (2023 November 23rd).

Adding the distance from the triangle pattern

to the breakout point, KGB is expected to trade

higher at RM2.35 [KGB-WB RM0.97] in the short term and RM3.28 [KGB-WB RM1.90] in the long term.

Kelington Group Berhad (KGB) produces liquid carbon dioxide. 

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Discussions
1 person likes this. Showing 3 of 3 comments

cgtan2020

good write up Chloe!!!

2023-12-29 09:42

speakup

tapi sifu Calvin say this is another scam company wor
who is telling truth?

2023-12-30 09:41

Cakes Moon

Amazing Chloe!!!
Your short-term target for KGD at RM2.35 achieved today (08-Jan-24)!!!

2024-01-08 17:08

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