KIMLUN (5171) - Kim Lun - Becoming the Gorgeous and the Sexiest (2) - YiStock

I wrote about Kim Lun with a title "Transforming". Below the link:
http://klse.i3investor.com/blogs/kimlun/93548.jsp
Kim Lun has since became one of my winner stock due to the company's greatest potential in precast manufacturing business. 
Some of my key points are:
(1) The precast business has now contributing more than 50% of company's earning (based on Q4, 2015 result) compared to construction and property segments. This segment of business has reached it economy of scale thus giving quite lucrative margin when compared to several quarters ago. The details about the segment has been grossly interpreted by me in the article.
(2) Recent win of MRT2 project on precast SGB amounted to RM 200 million (slightly lower then MRT1 SGB contract due to shorter distance) has fall within expectation of most research house. The share price did run but not as "agressive"
[What else is within the research house expectation? Yes, the upcoming MRT2 TLS contract which will likely be "VERY MUCH" bigger compared to MRT1. From recent win of tunneling work by Gamuda-MMC JV, (the contract amount is 2 times the size of MRT 1), i think is fair for us also to expect 2 times the contract amount size of MRT2 TLS contract amount compared to MRT1, which (IF) kim lun secure it, will certainly give a big push to the company's future earning.]
(3) Singapore LTA & PUB immediate upcoming projects (Cross Island Line & DTSS II) on top of other on going MRT project
(4) Improving balance sheet
I therefore offer my view of kim lun as per below:

Earlier Conclusion:

 

Kim Lun has:

 

(1) Improving balance sheet

 

(2) Order book at RM 1.4 billion which give earning visibility of 1 year to 2

 

(3) Aggressively tendering the infra project both in Malaysia and Singapore.

 

(4) Improving margin for the project.

 

(5) Manufacturing with better margin now play equal role.

 

(6) Valuation is certainly not expensive.

 

My TP is 2.80 in 6 to 12 months

 

For this article, it came after i read about this news:

提高效率 降劳工成本 建筑工程须达IBS 70分

http://www.nanyang.com/node/756820

（吉隆坡12日讯）政府相信工业建筑系统技术（IBS）是建筑领域未来的趋势，因此已强制规定，凡1000万令吉或以上的政府建筑工程，及5000万令吉或以上的私人领域建筑工程，都须在IBS分数中达70分。

首相拿督斯里纳吉说，IBS建筑方式是采用预先在工厂制成建构部件，之后在工地组装，已证实将有助加速建筑工程及减低劳工成本，同时能确保所有建构部分的素质符合要求。

推广永续环境

“再者，IBS是最佳的建筑系统，因为有助于推广永续环境，减少原料的浪费；而且这种建筑方式也会提升员工的安全和工作环境，减少工地意外的发生。”

纳吉也指出，落实IBS也会减少我国非技术员工，反之专注于预制与模拟化建筑，鼓励更多本地人以熟练员工、IBS部件组装员及机器操作员的职业，参与建筑领域。

纳吉还说，在第11大马计划下，政府计划通过多项措施，包括房屋援助计划（PBR）、人民组屋计划（PPR）、一个马来西亚亲民房屋计划（RMR1M）、 一个马来西人民房屋计划（PR1MA）、联邦直辖区房屋计划（RUMAWIP）和一个马来西亚公务员房屋计划（PPA1M）以兴建达65万3000间可负 担房屋。

“然而，我们了解到这远大的目标，需要我们采用新的科技和建筑方式，方能达到。”

纳吉今日是为2016年国际建筑周（ICW2016）主持开幕，致词时这么说。由于首相未克出席，因此其讲稿由公共工程部长拿督斯里法迪拉尤索夫代读。

各州应按IBS批屋业

出席嘉宾包括工程部副部长拿督罗丝娜、秘书长拿督佐哈里、马来西亚建筑工业发展局（CIDB）主席丹斯里阿末达祖丁、总执行长拿督阿末阿斯里及博闻博闻（东盟业务）董事经理M.甘地。

较后，阿末阿斯里在记者会上补充，该局也在向房屋及地方政府部建议，计划规定所有地方政府在批准私人领域的房屋发展计划时，要确保发展商符合IBS需求。

目前已有数个地方政府列明，要求发展商需要达特定的IBS分数，包括布城、吉隆坡市政厅及数个较大的市政府。

他说，根据该局最新的研究发现，仅有25%的私人领域建筑工程是有采用IBS技术，因此该局的目标是要在2018年，有超过50%的5000万令吉或以上的私人领域建筑工程是采用IBS技术。

私人界对IBS欠兴趣

阿末阿斯里指出，私人领域对IBS兴致缺缺，主要是人力资本便宜，外劳以底薪在工地工作，而且不会有太多要求，以致发展商或建筑商选择惯用的建筑模式。

“但如果需要业者对IBS的需求越高，这技术才会可行，成本也会降低。

“数年前，IBS建筑成本的确比传统建筑方式高，但根据工程局最新调查发现，现在IBS的成本与传统成本不相上下。

“我们相信若有更多业者使用IBS，其成本可进一步减少。”

至于IBS分数，大马建筑工业发展局拥有一套的算分系统，是根据业者所使用的建筑方式，包括从结构上、墙壁等方面来计算得分。

建筑工程强制采IBS技术

预先在工厂制成建构部件，再在工地组装工业建筑系统技术（IBS），不仅是多个大型地方政府规定发展商须采用的系统，政府也强制规定，凡1000万令吉或以上的政府建筑工程，及5000万令吉或以上的私人领域建筑工程，都需在IBS分数中达70分。

国际建筑周办逾40讲座

第16届国际建筑周从即日起至15日在吉隆坡国际会展中心（KLCC）进行，期间将举办超过40场的讲座及论坛。

主题为“提高建筑领域生产力”的国际建筑周从4月12至14日，联袂举行东南亚生态建筑展、IBS房屋博览会、建筑界职业展、亚洲绿色建筑展、亚洲太阳能展、亚洲生态照明展销会、建筑设计展及东协房地产及基础设施峰会。

今年，首次举办的IBS房屋博览会是旨在鼓励业者使用工业建筑系统技术（IBS），向业者推介最新的IBS产品和科技，用以兴建可负担房屋。

2016年国际建筑周获得超过100家家机构参展，并预计将吸引1万人次观展。

IBS的好处：

‧减少原料浪费
‧加速建筑工程

‧降低劳工成本

‧增强工地安全

My immediate thought: Kim Lun is getting "SEXIEST......"
(Of course there are more than 200 "registered" IBS companies registered with CIDB, but hardly these companies really practice it) 
Kim Lun should be by far the biggest and most successful precast and IBS manufacturer cum installer in Malaysia.  
According to the new rulling, the MINIMUM 70 points (which was previously imposed on goverment projects), are now also to be imposed to private sectors to bring down the overall cost of construction.
According to CIDB website, the pointing system was up to 70 points for goverment project, while private construction projects was up to 50 points, from year 2010 to 2015.
With new rulling come in, Minimum is now 70 points (terms and condition apply) under the road map of 2016 to 2020.

THE IBS CONTENT SCORING SYSTEM (from DIBS website)

• The maximum IBS Score for a building is 100 points.
• The IBS Score is made up of the following components:
  
  Part 1 – Structural Systems (Maximum score is 50 points)
  Points are awarded for various types of structural system used, e.g. precast concrete beams and columns, steel, prefabricated timber, etc.
  Part 2 – Wall Systems (Maximum score is 20 points)
  Points are awarded based on various types of wall systems used e.g. precast concrete panel, glass, dry partition, block work, etc.
  Part 3 – Other Simplified Construction Solutions (Maximum score is 30 points)
  Points are awarded based on usage of other simplified construction solutions e.g. standard components based on MS 1064, standardised grids, other 3D prefabricated
  components such as prefabricated toilets, staircases, etc.
• The Formula:
  IBS SCORE = SCORE FOR STRUCTURAL SYSTEMS + WALL SYSTEMS + OTHER SIMPLIFIED CONSTRUCTION SOLUTIONS

 

Kim Lun's fully owed subsidiary SPC Industries is expert in producing precast item for IBS. Furthermore, they themselve is also the builder and installer for IBS projects.

Wall Panel

Staircase

Bath room

Beam

Column
and others.
Based on my own guess,
i believe Kim Lun is OBVIOUS front runner of IBS and precast manufacturing business. The new rulling SHOULD benefit Kim Lun's precast segment and propel the earning to another new high.
Reason:
(1) There should be no immediate strong opponent with excellent track records.
(2) The entry barrier into the manufacturing is high viewing Kim Lun took many years to achive the economy of scale
To what extend?
I hope a qualified QS will help to answer.
My Simple Assumption is:
From 50 points to 70 points, it is a gap up of 40%. 
For every RM 100 mil project Kim Lun  received in the past, can i safely assumed it may now "translating" into RM 140 mil worth of project value in future? Of course, must first determined the precast concrete portion of the RM 100 mil in the first place.
In general, i expect the result should be enhanced with this new 70 points rulling.
On another note:
Kim Lun is spending close to RM 9 mil of finance cost annualy. This is closed to 13% of total 2015 annual profit.
If Kim Lun able to raise some money to settle the loan, the saving of interest itself will give a +13% push to the profit. 
With current balance sheet, it should not be difficult for Kim Lun to look for an investor.
 
Other players:
We have other late commers too on precast business, but i still feel Kim Lun is the most gorgeous and sexiest on precast segment.
(1) Mudajaya 70:30 JV with another company to form VS Millennium in mid 2015. 
(2) Chin Hin to further expand it AAC & wall panel segment (newly listed and valuation is too high for me at share price of RM 0.85)
(3) SCIB (not attractive to me)

Based on this new development, i'm even more confident that RM 2.80 is achieveable by annualising 7 sen EPS based on Q4 2015 at PE of 10.
But to me, 2.50 is consider very good already

Cheers,
YiStock

KIMLUN (5171) - Kim Lun - Becoming the Gorgeous and the Sexiest (2) - YiStock
http://klse.i3investor.com/blogs/kimlun/94771.jsp