· We maintain BUY on KKB, with an unchanged fair value of RM2.05/share. We had earlier pegged a 5% discount to an SOP value of RM2.16/share.

· KKB last Friday announced its 43%-directly owned associate Oceanmight had secured a wellhead platform fabrication contract with Talisman for the latter’s Kinabalu Redevelopment Project. The engineering, procurement and construction contract is scheduled to be completed by 2Q17. The contract sum was not made known.

· KKB also announced awards from SESCO for the annual supply of steel products (by 3Q16) and from Sarawak Energy for the supply and commissioning of a 1,000-tonne fuel storage tank for a power station (by 1Q16).

· KKB said all three contracts were worth a total of RM171.1mil. Recall Upstream had earlier this year reported KKB – among 8 Malaysian fabricators – to be the frontrunner for the job.

· This is KKB’s first major fabrication job. It bodes well for its prospects and is testament to its capabilities in the big league of O&G fabrication. The Kinabalu platform is reportedly located at a high-pressure, high-temperature zone, requiring fabricators to be from the top tier.

· Taking into account the better-than-expected 1H15 results and this latest development, we have revised upwards our FY15F earnings by 6%.

· At the same time, we have cut our conventional job assumption for FY15F to RM80mil from RM250mil previously. Our new order assumption for FY16F and FY17F is now at RM200mil each vs. RM250mil and RM280mil, respectively, previously. Post its recent 2Q, it still had an outstanding order book of ~RM30mil.

· We maintain our new O&G fabrication order assumption for Oceanmight at RM150mil each for FY15F and FY16F. Following this latest contract, Oceanmight’s tender book stands at ~RM150mil. We believe other tenders are being pursued, to the tune of another RM120mil. KKB itself is aggressive pursuing jobs within Sabah and Sarawak. · From its ~RM25mil maiden wellhead platform job that was completed in April this year, we gather that such fabrication jobs would have a significant positive earnings impact at the operating level.

· Mitigating any downside risks is a solid balance sheet, with net cash position at RM121mil as at end-June 2015 (+11% QoQ and vs. only RM9mil a year earlier).

Source: AmeSecurities Research - 15 Sep 2015