Monday, January 29, 2018

FW: AmBank Research - Kimlun Corporation : On land-buying spree BUY, 29 Jan 2018

 

 

STOCK IN FOCUS

Kimlun Corporation : On land-buying spree                                                          BUY

 

We cut our FY18-19F forecasts by 3% and 6%, and trim our FV by 3% to RM2.57 (from RM2.64) but maintain our BUY call. The earnings downgrade is to reflect higher interest expense arising from land acquisitions. Our FV is based on 12x revised FY18F FD EPS, which is in line with our 1-year forward target PE of 10–12x for small-cap construction stocks.

 

Kimlun has proposed a second acquisition of a bungalow project called Bukit Bayu in Seksyen U10, Bukit Raja, Shah Alam. Kimlun is acquiring from Melati Ehsan 30 bungalows and 47 bungalow lots sitting on 20.2 acres of land for RM68.4mil cash. Recall, in 2014, Kimlun first acquired 41 bungalow lots sitting on 8.9 acres of land for RM29.0mil cash. We understand that Kimlun will effectively take over the control of the project from Melati Ehsan with the second transaction.

 

We believe Kimlun’s latest move is both defensive and opportunistic in nature. It is defensive in the sense that Kimlun has to do something to prevent its 41 yet-to-be-launched bungalows from going down the same path as the initial phase, and Kimlun has decided to step into the driver’s seat for the entire project. It is opportunistic as we believe Kimlun has struck a good deal for itself in the second transaction.

 

Other reports

Tenaga Nasional : Soft unit demand in 1QFY18, but poised to pick up       BUY

Plantation Sector : News flow for week 22 – 26 January                                 NEUTRAL

 

 

STOCKS ON RADAR

FACB Industries Incorporated, George Kent, Jaks Resources, Carimin Petroleum

 

 

ECONOMIC REPORT

US — Expect strong economy and 3 rate hikes

 

 

NEWS HIGHLIGHTS

New cryptocurrency exchange to be launched next month

Better earnings visibility, prospects for Cypark

Green Packet's revenue to ‘easily’ double after MYTV job win

PRG eyes medical tourism market

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

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