KIMLUN (5171) - April Special on Kimlun - The Golden Dragon

KIMLUN (5171) - April Special on Kimlun - The Golden Dragon

Kimlun Corporation Berhad is a well known established player in the local construction market. Kimlun came to fame recently with the launch of the KVMRT project, in which Kimlun is one of the core supplier for the pre-cast concrete material for the KVMRT Line 1.

Kimlun is a quite diversified player in the construction scene. Kimlun had exposure in the Singapore MRT line, KVMRT series, LRT extension series, Iskandar Malaysia construction and it's own property launch in Cyberjaya.

With a great journey lying ahead of Kimlun in the coming days, when is the best moment to captivate on the rising journey of Kimlun.

The latest price chart of Kimlun had indicated that the share price had saw a consolidation at the range of RM 1.25 for the past 3 to 4 months. Albeit of the company exposure to high profile construction such as KVMRT Line 1, the counter had saw a lower transacted volume, however, it had not been shy of a gradual buy back in big batches from it's major shareholder, Pang Tin @ Pang Yon Tin through his privately held vehicle, Phin Sdn Bhd.

 Pang Tin @ Pang Yon Tin had been buying back the company shares through his privately owned company in the open market from various price starting from RM 1.60 to a lower range of RM 1.20, while the latest filling shown a 200,000 units purchase at RM 1.24. The privately held vehicle, Phin Sdn Bhd had added approximately 3 million units of since July 2014.


Kimlun - Just too good to be missed?
At the current price of RM 1.26, is Kimlun a good buy for real investor?

According to the price chart of Kimlun, the current price is actually situated at the strongest base line support price in Kimlun's 3 year history, which is at the range of RM 1.25. While there had been no doubts on it's fundamental outlook, Kimlun is a rare breed of construction counter that reward it's shareholder with acceptable dividends ranging from 3 cents to approx 5 cents, despite the high operating cost environment.

 The latest FYE 2014 had saw Kimlun ended it's financial year with a EPS of 15.39 cents, with a dividend of 3.8 cents to be rewarded to it's shareholder in the coming days. NTA increase from RM 1.24 to RM 1.33, and Kimlun debts had been decreasing constantly.

Based on a fair value of PER x10 for FYE 2014 result of EPS 15.39 cents, Kimlun will be easily be valued at RM 1.50.

A Stronger 1Q FYE 2015 result

Kimlun 1st quarter result will be expected to be stronger through it's Construction, Manufacturing & Trading as well as Property arm.

Kimlun construction projects are mainly focused in the region of Johor. The construction projects are mainly awarded by reputable listed developer like UEM Sunrise, UMLand, Country View (CView), SPSetia, IOI Property, MahSing, Keck Seng, Daiman and IJMLand.

In line with the Pre-GST push, we should be seeing a higher revenue from it's construction arm to reduce the exposure of the works and material that will be subjected to the 6% tax.

On it's manufacturing and trading arm, Kimlun will expect a stronger revenue on it's Segmental Box Girdle and Tunnel Lining Segments towards the KVMRT Line 1 project starting from October 2014. This is due to the completion of the ground work / baseline work ( Erection of concrete support pile, tunnel works and etc) which will then after only see the Segmental Box Girdle (SGB) and Tunnel Lining Segments (TLS) being installed in.

 (Segmental Box Girdle)

(Tunnel Lining Segments)

According to sources, Kimlun had fully delivered all the orders for it's Tunnel Lining Segments in 1Q 2015.

Currently, most of the progress in the KVMRT Line 1 will be fixing and installing the Segmental Box Girdle. Kimlun will be expected to see a stronger revenue from the delivery of SGB for the KVMRT Line 1.

On it's property arm, their maiden project at Cyberjaya, dubbed as The Hyve had been completed by more than 50%, and with a take up rate of 80%. The Property arm will expect to contribute higher in the 1Q FYE 2015 through higher billings. The Hyve unbilled sales stand at a good RM 100 million.


Riding on A Southern Boom with A High Speed Rail

Kimlun had been a core supplier for the SGB and TLS in the building of Singapore SMRT. The latest event had seen Kimlun securing SGD 43million in the Singapore's Thomson line SMRT. Kimlun should be participating for the Deep Tunnel Sewerage in Singapore.

While the Lion City had been promising lucrative jobs, the latest approval of the High Speed Rail that will be kicked start in 2016 will see another grand job for Kimlun to participate. Kimlun will be seen as a front runner for the Johor + Singapore portion, given their current involvement in the KVMRT and SMRT, as well as a significant construction player in Johor. The RM 38.4 billion HSR project that connects Kuala Lumpur and Singapore in 90 minutes at a speed of 250km/h will see stops at Putrajaya, Malacca, Negeri Sembilan and Johor.


Current Strong Construction Themed

The construction sector had been bullish in the recent days with the announcement of KVMRT Line 2 and Pan Borneo Highway to kick start the whole theme. The latest being the approval of High Speed Rail which will be adding another RM 38.4 billion worth of contract value into the sector.

In conclusion, Kimlun is just too good to be missed at the current price range, in a quick summary, Kimlun will be an interesting counter to be look at based on:
- Huge open market buying from major shareholder through Phin Sdn Bhd
- Kimlun current price is at the strongest base price range of RM 1.25
- Kimlun value at RM 1.50 based on PER x10 in FYE 2014 eps of 15.39 cents
- Stronger result for 1Q FYE 2015 through a stronger revenue billings from Pre-GST effect
- Segmental Box Girdle to continue contributing higher in the Trading & Manufacturing Arm
- Southern Economic Boom with Singapore and approved High Speed Rail
- Current strong construction theme in KLSE


Burst it on Kimlun? You decide

Bone's short term TP : RM 1.50

Cheers and have a nice day

Regards,
Bone

http://bonescythe.blogspot.com/