KUALA LUMPUR: Kelington Group Bhd (KGB) is a unique proxy in Malaysia to the global front-end semiconductor space which is still seeing a healthy expansion pipeline, Kenanga Research said.
The firm said KGB managed to secure RM347 million new order during the reporting quarter, which outpaced financial year 2021 (FY21) average quarterly replenishment rate by a solid 17 per cent.
After recognising an all-time high the first quarter (Q1) of FY22 revenue, the group's order-book further grew to RM1.2 billion (from RM1.1 billion in Q4 FY21) while tender-book remains elevated at RM1.4 billion.
For Q1, KGB's revenue held up very well at RM173.3 million, Kenanga Research said, despite noises of China lockdowns, insufficient labour and material shortage.
This was achieved on the back of aggressive expansions in the semiconductor space it added.
"Interestingly, revenue from the ultra-high purity (UHP) segment even recorded a 3.5 per cent quarter-on-quarter (Q-o-Q) growth which clearly dismissed the rumour that work in China has been halted due to the ongoing lockdown.
"While headlines continue to report on sporadic lockdowns in China, we take comfort that management has instituted necessary precautions to ensure works on the ground progress according to schedule across all provinces, as well as the turnkey project in Malaysia and other UHP jobs in Singapore," it said.
Meanwhile, Kenanga Research said KGB's Q1 FY22 of RM8.3 million was understandably lower as the group came off its seasonally stronger quarter and commencement of the turnkey project in Sarawak which has modest margins.
Overall, Kenanga Research said KGB's Q1 FY22 core net profit of RM8.3 million was the company's best Q1 results ever which came in within expectations, representing 19 per cent each of both the firm's and consensus estimates.
Kenanga Research has maintained its "Outperform" call on KGB, with an unchanged target price of RM1.90.