THE FAST & FURIOUS MODE ON

Super duper momentum stock for

June 2024 /

KGB / Kelington Group Berhad

SEE_ Research

Target Prices

RM 4.10 / mother share

RM 2.70 to RM 2.80 / KGB WB

Target Prices

RM 4.10 / mother share

RM 2.70 to RM 2.80 / KGB WB

RM 2.70 to RM 2.80 / KGB WB

Target Prices

RM 4.10 / mother share

RM 2.70 to RM 2.80 / KGB WB

​

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A SMALL MALAYSIAN COMPANY OF INDUSTIAL GAS TO BE KNOWN IN ASIA ,

SUBSEQUENTLY IN EUROPE

SUBSEQUENTLY IN INNER HONG KONG

SUBSEQUENTLY IN INDONESIA

THE ONLY COMPANY IS LISTED IN KLSE

OF INDUSTRIAL GASES

A NEW BEGINNING FOR KGB

TO BREAK INTO NEW MARKETS IN EUROPE AND HONG KONG WITH THEIR OWN PHYSICAL OFFICES ALREADY FULLY SET UP WTH STAFF MEMBERS IN FULL ACTION TO OBTAIN FURTHER NEW BUSINESSES _____

THAT WILL PENETRATE NEW MARKETS AND ENJOY FURTHER NEW DEVELOPMENTS AND BECOME

A SMALL GIANT IN THIS FIELD TO BE BETTER ;

WITH WELL KNOWN WORLD LEADER __ LIKE LINDE

And others with the names listed below

Top 5 UHP INDUSTIAL GAS

Supplier Names

Country/Region

Revenue

(2020)

Year of Establishment

Net Profit Margin

==============================================================

Linde Plc

EMEA, APAC, America

$27.24 billion

1879

11.99%

==============================================================

Air Liquide

Europe, APAC, America, MEA

€20.49 billion

1902

12.33%

==============================================================

Air Products

North America, APAC, LATAM, EMEA

$10.32 billion

1940

20.33%

==============================================================

Messer Group

South America, Asia, North America, and Europe

$3.13 billion

1932

13.5%

==============================================================

Nippon Sanso (Matheson)

US, Europe, Japan, Rest of APAC

¥818.24 billion

1910

==============================================================

Highlights

Among the 3 investment banks ___

Kenanga Investment Bank

Affin Hwang Investment Bank

RHB Investment Bank

The closest one to Kelington Group Berhad is

Kenanga Investment Bank as previously the had been the sponsor and main organiser to Kelington Group Berhad to be listed in KLSE __ in ACE Market

==============================================================================

ABOUT KELINGTON GROUP

Kelington Group Berhad

(Registration No. 199901026486 (501386-P)

was established in 1999 and

subsequently listed on

Bursa Malaysia Securities Berhad in 2009 _ inside ACE market.

Initial Public Offering

KELINGTON GROUP BERHAD

Date of listing

25/11/2009

Enlarged issued and paid up share capital in the following

Units 74,710,000

Currency MYR 7,471,000.000

Par Value ($$) MYR 0.100

Stock code 0151

Stock name KGB

ISIN code MYQ0151OO009

Board ACE Market

Sector TRADING/SERVICES

And subsequently transfer from

ACE MARKET TO MAIN BOARD SUCCESSFULLY.

Remarks :

Kelington Group Berhad is sponsored by Kenanga Investment Bank Berhad.

https://m.malaysiastock.biz/Company-Announcement.aspx?id=545344

And embarked on its new journey of becoming a new brand of UHP gasses supplier ; manufacturer to be progressive known in Asia and Oceania ; and further into

European countries by expanding into

Germany with their local physical office established to penetrate positively into the lucrative markets of Europe .

A new beginning

for Kelington Group Berhad with forward looking plans to reach out into new markets of

Europe and Hong Kong too.

With such excitement swamped with abundance of opportunities of continous growth ;

coupled with increasing coming financial quarters __

that are fully translate into higher earning per share ;

thus higher profits will be maintained and achieved successfully.

And the end result __ the above positive indicators will spur the prices of mother share of

K G B

K G B WB TO NEW HIGH ABOVE

RM 4.10 / MOTHER SHARE

RM 2.70 - RM 2.80 LEVEL

==============================================================

IMPORTANT NOTE

Wall Street analysts forecast KGB

stock price

to rise over the next 12 months.

According to Wall Street analysts, the average 1-year price target for

KGB is 4.23 MYR

with a low forecast of 3.89 MYR

Kenanga Research & Investment

Kelington Group - Spotless Earnings Track Record

kiasutrader

Publish date: Fri, 24 May 2024, 12:35 PM

KGB’s 1QFY24 results met expectations. Its 1QFY24 net profit jumped 54% buoyed by high-margin UHP projects and maiden contribution from its second LCO2 plant.

We foresee significant job wins in 2HCY24.

We keep our forecasts but raise our

TP by 21% to RM4.10 (from RM3.40)

and reiterate our OUTPERFORM call.

KGB remains one of our sector top picks.

KGB’s 1QFY24 net profit of RM24.9m (+54% YoY) accounted for 24% of our full-year forecast and 21% of market consensus.

We deem the results within expectation as 1Q is KGB’s seasonally weakest quarter.

YoY, KGB’s 1QFY24 revenue rose 9.8% on the back of robust project deliveries across all the operating markets. Geographically, revenue recognition from Malaysia (c.45% of group revenue) grew 6.4% while China (c.31% of group revenue) trended 128% higher as momentum picked up among China’s wafer fab expansion.

This helped to offset weaker showing from its Singapore operation (c.21% of group revenue) which fell 32%. Its net profit jumped by a sharper 54% due to:

(i) higher proportion of UHP jobs delivered, and

(ii) greater contribution from its industrial gas (yielding twice higher GP margins compared to other segments) as its second LCO2 plant came online, leading to higher net profit margin of 7.3% (vs. 5.2% in 1QFY23)

QoQ, its 1QFY24 revenue fell 29% while net profit shrank 30% as 1Q is seasonally its weakest quarter.

It is worth noting that the top line of its industrial gas segment rose 17% due to the commencement of its second LCO2 plant which enjoyed a healthy take up rate.

Outlook.

We expect sustained strong performance from KGB underpinned by substantial increase in higher-margin UHP jobs, representing >70% of its outstanding orders (vs. c.60% in FY23).

The group has secured RM235m jobs up to 31 Mar 2024, bringing its total outstanding order book to RM1.25b.

We are sanguine that the group will be able to secure at least RM1b worth of higher-margin orders in FY24 (vs. RM1.1b in FY23) backed by:

(i) more wafer fab expansion in Singapore slated to take place from 3Q onwards, and

(ii) China’s ambitious plans to increase its semiconductor fabs by 60% in three years for domestic consumption and double the capacity in five years, according to TendForce.

Forecasts. Maintained

Valuations.

We lift our TP by 21% to RM4.10

(from RM3.40)

based on an unchanged 21x PER pegged to a rolled-forward earnings base of FY25F (from FY24F).

Our valuation represents a c.10% discount to peer’s forward mean PER of 24x which includes global players such as

Air Products,

Air Liquide and

Linde.

There is no adjustment to our TP based on ESG given a 3-star rating as appraised by us (see Page 4).

Investment case.

We like KGB for:

(i) it being a direct proxy to the front-end wafer fab expansion,

(ii) its strong earnings visibility underpinned by robust order-book and tender-book exceeding RM1b, and

(iii) its strong footholds in multiple markets, i.e. Malaysia, Singapore and China. Maintain OUTPERFORM.

Risks to our call include:

(i) a slowdown in wafer fab investment,

(ii) worsening Sino-US chip war, and

(iii) low utilisation of its LCO2 plants.

Source: Kenanga Research - 24 May 2024

==============================================================

In conclusion ;

SEE_Research : 

RM 2.70 to RM 2.80 / KGB WB

Target Prices

RM 4.10 / mother share

RM 2.70 to RM 2.80 / KGB WB

Thank you for reading and see you in the next post.

THE ABOVE IS NOT A BUY OR SELL CALL AND IS ONLY A PERSONAL OPINION, WRITTEN AS ARTICLE FOR SHARING PURPOSES TO KLSE COMMUNITY MEMBERS.

DISCLAIMER: Investment involves risks, including possible loss of investment and other losses.

This article and charts are provided for information only and should not be construed as a solicitation to buy or sell any of the instruments mentioned herein.

The author may have positions in some of these instruments.

The author shall not be responsible for any losses or profits resulting from investment decisions based on the use of the information contained herein.

If investments and other professional advice is required, the services of a licensed professional person should be sought.

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