Kimlun’s 1Q2016 net profit rose 21.2% Y.o.Y to RM17.1 mln, helped by the execution of higher margin construction projects and lower raw material costs. Revenue for the quarter, however, declined 27.1% Y.o.Y to RM234.8 mln due to lower balance of construction orders carried forward from the previous year. The reported earnings came in slightly above our expectations, accounting to 28.6% of our full year estimated net profit of RM59.9 mln. Meanwhile, the reported revenue came within our expectation as it accounts to 23.9% of our full year revenue of RM984.2 mln.
Segment wise, the group’s construction division’s gross profit gained 9.8% Y.o.Y to RM20.0 mln on higher billings from the execution of projects secured in the past two years. The manufacturing and trading segment’s gross profit climbed 19.8% Y.o.Y to RM12.8 mln on higher contributions from the concrete rail sleepers and industrial building system (IBS) orders which yield better margins vs. segmental box girders, coupled with favorable foreign exchange gains from the depreciation of the Ringgit against the Singapore Dollar. The group’s property development gross profit stood at RM129,000 as oppose to no contribution from the previous corresponding quarter.
We believe that Kimlun is in the prime position to capitalise on some of the megainfrastructure projects in the pipeline, being the pioneer in the supply of IBS – which is also in line with the Government’s focus. Meanwhile, the group’s gearing has been pared down to 28.2% in 1Q2016, from 35.4% in 2015 – underlining the management’s prudence in maintaining a strong balance sheet. BUY, TP RM2.20.
Source: M+ Online Research - 31 Mar 2015
KIMLUN (5171) - Kimlun Corporation Bhd - All Round Improvement
http://klse.i3investor.com/blogs/MplusOnline/97572.jsp
