- We maintain HOLD on Kimlun with a lower SOP-based fair value of RM1.45/share (vs. RM1.56/share previously) as we  roll forward our base year to FY15F. 

 - Kimlun yesterday secured a RM230.7mil job from Nusajaya  Heights Sdn Bhd (subsidiary of UEM Sunrise) for the  construction of affordable apartments in Johor. The job is  expected to be completed by Aug 2017. 

 - This has brought its new order book win to RM440mil for  FY15F, following two jobs that it secured just last week.  The jobs flow is positive following the lull in new jobs win  last year.

 - In our recent meeting with management, it noted that it will  bid more actively for jobs this year. To this effect, the  group is looking at securing RM600mil-RM800mil worth of  new jobs this year (FY14: RM270mil, FY13F: RM1.1bil).   

- Management noted that developers in Johor are moving  towards launching affordable homes amid the general  slowdown in the state, while industrial developments  continue to be in demand.   

- Nevertheless, we have a conservative new order wins of  RM600mil for this year (vs. its tender book of RM500mil) as  we remain cautious on the property outlook in Johor.   

- We estimate a balance order book of ~RM1.4bil currently  to keep the group busy for FY15F-16F.   - Management expects its construction gross margins to  stabilise at the current level (~6%) following the  contraction from 11% in FY11 (due to higher operating  costs incurred for high-rise jobs).   

- Gross margin for its manufacturing division is also  expected to improve slightly (9MFY14:16%) as it  completes production of the segmental box girders  (SBGs) for KVMRT1 in 1QFY15. Note that SBG commands  lower margins compared to the tunnel lining segments  (TLS).   

- Kimlun is looking to secure more packages for the  Singapore’s MRT Thomson line this year. It has to-date  secured three packages worth SGD43mil for the  Thomson line. Other potential jobs include the proposed  deep tunnel sewerage system in the island state.   

- While Kimlun is in good position to secure jobs for the  upcoming KVMRT2 project, we do not foresee tenders to  come out anytime soon.   

- We maintain HOLD given the current macro slowdown in  the Johor property market; we also do not foresee  tenders for KVMRT2 to come anytime soon while margins  are expected to be flattish moving forward.   

Source: AmeSecurities