- We maintain HOLD on Kimlun Corporation Bhd with an unchanged SOP-based fair value of RM1.56/share.

- The group announced last Friday that its wholly-owned subsidiary, Kimlun Sdn Bhd, had secured two jobs in Johor collectively worth RM110mil.

- The first project worth RM63.6mil was awarded by Tentu Teguh Sdn Bhd (subsidiary of United Malayan Land Bhd) for the main building works of 89 factory units in Johor Bahru. The job is expected to be completed by Dec 2016.

- The second project worth RM47mil is for infrastructure works for Phase 3 of Southern Industrial and Logistics Cluster in Nusajaya. The job was awarded by UEM Land Bhd and is expected to be completed by April 2016.

- The new jobs are positive given the general slowdown in construction activities in Johor. This also follows a lull in new job wins for Kimlun last year.

- Note that for YTD Sept 2014, Kimlun had only secured ~RM150mil worth of new jobs (vs. the record win of RM1.1bil in 2013).

- We understand that the group did not actively bid last year given the outstanding jobs at hand (following the record win in 2013). As at end-Nov, the group has a balance order book of RM1.5bil.

- Despite the two new wins, we remain cautious given the general market outlook in Johor. In addition, the group’s margins had continued to contract in the past quarters.

- Order book replenishment is key for Kimlun to sustain earnings as some of its jobs will be completed this year.

- While Kimlun is one of the main supplier of segmental box girders (SBG) and tunnel lining segments (TLS) for KVMRT1, we expect any packages for KVMRT2 to only come earliest next year.

- We maintain our numbers for now pending a meeting with management. We maintain NEUTRAL given the lack of catalysts in the near-to-mid-term.

Source: AmeSecurities