KGB (0151) - Chinese Billionaire Buying Substantial Stakes ! Target Price 50sen !
KGB
- The Group is principally engaged in the business of providing engineering services and general trading, specifically in the provision of Ultra High Purity (UHP) gas and chemical delivery system solutions that comprise system design and installation; gas and chemical delivery equipment; control and instrumentation; quality assurance and quality control services; and maintenance and servicing to various Foundries (Semiconductor / Flat Panel Display) as well as to clients who require UHP gas or chemical delivery systems in Malaysia, the China, Taiwan and Singapore.
- Highlights that can positive impact on the Company’s earnings and net assets:
1. Strong order book – The Group has a strong order book amount to RM425mil of which RM253mil remains outstanding. The outstanding order book can keep the Group busy for another 6 months more.
Breakdown of order book:
- The contract value for the LOA is RM70mil with a completion period of 17 months for the Works. The contract can secure a quarterly RM12mil averagely with average gross profit margin of 11.5% equivalent to RM1.4mil GP.
- The additional outstanding order book can secure a quarterly approximately RM85mil revenue or higher if new order book increase during the financial year.
According to the news interview with the managing director, the Group is tendering for a RM500mil project and awaiting the tender outcome.
In the year to date 30 June 2016, the Group has secured a RM160mil order book in halve year (Historical FYE2015: RM287mil, FYE2014: RM225mil). In the remaining halve year to 31 December 2016, the Group ought to secure higher order book than 2015 and 2014.
2. Litigation claim – The Group is in the midst of recovering the impaired receivables from (a) subcontractors and (b)contractor.
(a) The provision of RM4.6mil has been made on deposit impaired in FYE2015 (resulted loss in Q4 FYE2015) by subcontractor Hui Neng Mechanical & Electrical Engineering Co. The judge is in favour of Kelington Taiwan and allowed Kelington Taiwan’s claim of RM4.3mil equivalent to EPS of 1.95 cents.
Remark: All litigation costs are recovered and borned by Hui Neng in which is beneficial to the Group’s earnings
(b) The impairment of doubtful debts of RM2.9mil has been made in the financial year ended 30 June 2016 which brought down the net profit to only RM1.9mil. The case is in the initial stage and any recovery will bring EPS of approximately 1.3 cent to the Group.
- The Group will distribute dividends annually ranged between 0.5 cent to 1 cent. In FYE2015 the Group has distributed final tax exempt dividend of 0.5 cent per share which equivalent to 2% of dividend yield.
- In 30 September 2016, the directors have exercised the share option with 1.9mil shares exercised at RM0.255 per share.
- With the above facts, the Group is forecasted to achieve a EPS of 4cents, with PE of 12 to 15, the share price should be valued at RM0.48 to RM0.60.
** PE is derived from similar competitors i.e. SEB, KKB, SCOMIEN, etc engineering background.
Among the competitors, we are in favour of KGB due to strong order book, strong likelihood the impaired deposit and receivable can be recovered, management confident of the company turnaround plan, good dividend payout, etc. KGB is significantly undervalued based on the facts I stated above.
Kelington bags RM40m contract
Posted on 27 January 2017 - 05:38am
PETALING JAYA: Integrated engineering solutions provider Kelington Group Bhd’s wholly owned subsidiary Kelington Technologies Sdn Bhd has received a RM40 million contract to provide turnkey construction and engineering services for one of the world’s major suppliers of specialty emulsion polymers.
Under the scope of the contract, Kelington will be involved in constructing a new manufacturing facility in Pasir Gudang, Johor and provide all mechanical, piping and equipment erection works. The company will also provide civil, building, structural, architectural and finishing works for the facility.
The project will be funded via internally generated funds.
Kelington CEO Raymond Gan said the contract adds credence to its track record of carrying out turnkey construction and engineering services for the building of new manufacturing facilities.
“We are confident that our growing reputation will strengthen our profile when bidding for new similar type jobs,” Gan said in a statement.
Kelington has expanded from being an engineering specialist in handling ultra-high purity gas and chemicals to a provider of turnkey engineering services covering civil, mechanical and electrical works.
Inclusive of this new contract, the group’s outstanding orderbook across its operations in Singapore, China, Taiwan and Malaysia currently stands at RM260 million.
The contract is expected to contribute positively to the earnings and net assets of Kelington for the financial year ending Dec 31, 2017.
Notice of Interest Sub. S-hldr (29A)
KELINGTON GROUP BERHAD
Particulars of Substantial Securities Holder
Name MR HU KEQIN
Nationality/Country of incorporation Singapore
Descriptions (Class & nominal value)
Ordinary Share of RM0.10 each
Name & address of registered holder
Palace Star Sdn. Bhd.
3, Jalan Astaka U8/83
Seksyen U8
Bukit Jelutong Industrial Park
40150 Shah Alam
Selangor Darul Ehsan
Date interest acquired & no of securities acquired
Currency Malaysian Ringgit (MYR)
Date interest acquired 23 Nov 2016
No of securities 100,299,290
Circumstances by reason of which Securities Holder has interest
Acqusition of not less than 15% shares in Palace Star Sdn. Bhd.
Nature of interest
Indirect Interest
Price Transacted ($$)
Total no of securities after change
Direct (units)
Direct (%)
Indirect/deemed interest (units)
100,299,290
Indirect/deemed interest (%) 45.35
Date of notice 28 Nov 2016
#371 Hu Keqin & family
2016 China Rich List Net Worth
$1 Billion
Age
58
Source Of Wealth
chemicals, Self Made
Residence
Beijing, China
Citizenship
China
Hu Keqin & family on Forbes Lists
#371 China Rich List (2016)
Hu Keqin chairs the Reward Group, whose business is focused on three areas: home-care chemicals, dairy and real estate.
KGB has been trading above its upward sloping 20-Day Moving Average which is a good sign. In addition, the price just broke the resistance of 0.32 reinforcing the bullishness in the recent price movement. This breakout was accompanied by a higher than average traded volume which shows the enthusiasm of the traders to push the price higher and past this resistance hence giving a higher probability of a successful breakout. Target Price 50sen. Strong Buy !
KGB (0151) - Chinese Billionaire Buying Substantial Stakes ! Target Price 50sen !
http://klse.i3investor.com/blogs/Stockoftheday/115071.jsp
