- Last Friday, Kimlun Corp Bhd announced on Bursa Malaysia that it had accepted the award of two projects in Johor worth a total of RM330mil.

- The first project worth RM210mil is for the construction of service apartments and offices in Puteri Harbour. The award is by UEM Sunrise Bhd’s unit Aston Star Sdn Bhd.

- The second project worth RM115.5mil is for earthworks, piling works and structure works for two commercial building blocks in Johor Bahru. The award is by IOI Properties Bhd’s unit Wealthy Growth Sdn Bhd.

- The two projects are expected to be completed by March 2016 and Sept 2014, respectively.

- With the two new jobs, Kimlun has won a total of ~RM1bil new jobs for this year. This has exceeded our FY13F assumption of RM650mil and last year’s new job wins of ~RM800mil.

- The new job affirms our view of Kimlun – a Johor-based construction player – as a cheaper proxy to the surge in construction jobs in Iskandar Malaysia. Kimlun’s outstanding order book stood at RM1.3bil as at end-June.

- Kimlun has also won a RM60mil job from Mah Sing to construct factories, and a RM296mil job from IOI Properties to build serviced apartments.

- Management has earlier indicated that 2H would likely remain muted due to lower margins and deferred recognition of construction jobs. Nevertheless, we remain optimistic as we expect contributions to come in strongly from the new job wins from FY14F onwards.

- Meanwhile, we understand that the main contractor of Singapore’s Thomson MRT line is expected to be appointed soon, with the precast packages expected to be awarded by yearend.

- Pending a meeting with management, we maintain BUY on Kimlun with a fair value of RM3.20/share – a 20% discount to our SOP-derived value of RM4.00/share. It is currently trading at 5x-10x PE for FY13F-15F.

Source: AmeSecurities