- Last Friday, Kimlun Corp Bhd announced on Bursa Malaysia that it has accepted a construction job from SP Setia worth RM70.5mil.

- The job comprises construction of apartments and ancillary buildings in Johor Bahru. Kimlun’s wholly-owned unit, Kimlun Sdn Bhd, had received the letter of award from Bukit Indah (Johor) Sdn Bhd, a unit of SP Setia Bhd.

- The construction work is expected to be completed by October 2015.

- With the new job, Kimlun has successfully secured RM1.1bil worth of new jobs this year, surpassing last year’s RM800mil. This is in line with our new construction order book assumption of RM1.1bil for FY13F.

- In the 2H alone, Kimlun secured RM750mil of new jobs. We expect to see significant earnings accretion from these new jobs from next year onwards.

- As at end-June, Kimlun had an outstanding order book of RM1.7bil (construction: RM1.3bil, manufacturing: RM400mil).

- While we do not expect any more major construction jobs by year-end, Kimlun is seen as one of the frontrunner to secure the supply tunnel lining segment (TLS) package for the Thomson MRT line in Singapore. The package is estimated to be worth SGD100mil (RM250mil).

- We continue to like Kimlun as a proxy to the surge of construction jobs in Iskandar Malaysia and MRT jobs in Singapore and the Klang Valley.

- We maintain BUY on Kimlun with a fair value of RM3.22/share – a 20% discount to our SOPderived value of RM4.03/share. At the current level, it is trading at 5x-11x PEs for FY13F-15F.

Source: AmeSecurities