KUALA LUMPUR: Kelington Group Bhd's latest RM330 million job win is one the company's largest non-turnkey awards which typically yield better margins, Kenanga Research said.
The firm said including the recent job win, Kelington had surpassed its replenishment forecast to mark a new record of RM1.28 billion against FY21 of RM1.19 billion which included a large turnkey project.
"We are pleasantly surprised by the achievement despite the absence of turnkey projects this year.
"The group's current orderbook has now swelled to RM1.87 billion which will provide very solid earnings visibility for FY22 and FY23," Kenanga Research said in a note today,
Yesterday, Kelington surprised the market with a huge non-turnkey job win worth RM330 million from a German customer for a new wafer fabrication plant in Kulim.
The job entails the supply of ultra-high purity (UHP) gas delivery systems for both bulk gas and specialty gas.
The contract was awarded by the German semiconductor company that was planning a new wafer fabrication facility in Kulim, Kedah.
Given that this is a new wafer fab, the award will be a base build job that includes both bulk gas and specialty gas systems, commencing immediately until September 2024.
However, Kenanga Research said although the size of UHP contracts awarded was growing, the manpower requirements did not increase linearly.
"This is attributable to the group's effort in fabricating its proprietary gas equipment two years ago which is starting to garner customer's favour, hence contributing to higher contract value with similar workforce size," it added.
Kenanga Research raised Kelington's FY23 earnings by five per cent to factor in the higher-than-expected order replenishment.
It maintained its "Outperform" call on Kelington with a higher target price of RM1.70 from RM1.60 previously.