INVESTMENT HIGHLIGHTS

• Agreement was entered between KKB and Sinohydro Corporation Sdn Bhd for the supply of pipes and fittings, on top of purchase order for the supply of steel products

• The contract sum for both jobs was estimated at RM29m

• We make no change to our estimates, as the latest job value secured is within our expectations

• Maintain NEUTRAL with unchanged TP of RM1.47

Agreement was entered between KKB and Sinohydro Corporation for the supply of pipes and fittings. Additionally, KKB has also received a purchase order for the annual supply and delivery of steel products from Syarikat SESCO.

The contract sum for both jobs was estimated at RM29m. Accordingly, the works will run for approximately four to nine months. In our estimates, the sum was already accounted in our total new jobs for this year amounting to RM250m. As of this year, we noted that KKB has announced RM217.4m worth of new orderbook, to make up 87% of its job target in FY19.

Changes to estimates. We make no change to our estimates, as the latest value of new jobs secure is within our expectations.

Maintain NEUTRAL. KKB has been actively bidding for the state water projects in 1H19, indicating that any upcoming awards from the project could potentially manifest towards the year end. In the near term, we expect the results to be within our expectations, supported by the progress billings for Pan Borneo Sarawak package. Given the strength shown in share price (it has risen by +66.7% on year to date basis, we maintain NEUTRAL with unchanged TP of RM1.47. The upside risks to our call are 1) faster than expected progress in the construction division, and 2) sooner than expected state project awards. Moving forward, any retracement in share price should be seen as a chance to accumulate.

Source: MIDF Research - 05 Sept 2019