Kkb Engineering Berhad

@BrunoBoon $PANTECH / 5125 (PANTECH GROUP HOLDINGS BERHAD) $RESINTC / 7232 (RESINTECH BERHAD) $KKB / 9466 (KKB ENGINEERING BERHAD) all come to mind as well.

I think the development of new water treatment plants have been in the talks for a long long while. Besides that, there is focus to reduce NRW, or wastages, by upgrading and replacing old pipe infra.

KKB Engineering Bhd has secured two contracts and one purchase order, totalling RM93mil.

$KKB / 9466 (KKB ENGINEERING BERHAD)
Research by RHB
Buy - TP RM1.95

"Good Things Take Time; Stay BUY"

Keep BUY with new MYR1.95 TP from MYR2.11, 19% upside and c.3% yield. KKB Engineering’s 1H24 core profit of MYR7m (-45% YoY) missed our and Street’s estimates – making up 24% and 22% of full-year projections partly due to higher-than-expected portion of non-controlling interests (NCI). Nevertheless, we expect better contributions in 2H24 from projects such as the Rosmari & Marjoram (R&M) onshore gas plant in Bintulu project moving higher along the S-curve. We continue favouring KKB for its prowess in Sarawak-centric infrastructure and oil and gas (O&G) jobs.

Analyst:
Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com

More Good News on Steel Industry

1. Data centre boom, chip industry expansion expected to boost local steel demand
- Steel consumption is expected to see positive growth this year, reaching 8.3 million tonnes, primarily driven by the construction of data centres. If infrastructure projects like the Penang light rail transit commence, steel demand could approach nine million tonnes.

2. Miti working with construction industry, Works Ministry to ensure more local steel used in govt projects
- The government is exploring ways to enforce greater use of local steel products in government projects. Additionally, a two-year moratorium on approvals for expansion and diversification in the iron and steel industry was implemented in August 2023. This moratorium applies to all inquiries, assessments of current applications, new applications, licence transfers, expansions, regularisations, and diversifications for manufacturing licences in the iron and steel industry.

Companies poised to be benefited: $HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD), $ANNJOO / 6556 (ANN JOO RESOURCES BERHAD), $KKB / 9466 (KKB ENGINEERING BERHAD), $CSCSTEL / 5094 (CSC STEEL HOLDINGS BERHAD), $SENDAI / 5205 (EVERSENDAI CORPORATION BERHAD), CHINWEL, TONGHER, SSTEEL, ASTINO, MASTEEL, TSA, LEFORM, LIONIND, BWYS, LEONFB, TASHIN, YLI, etc.

Sarawak's Economic Takeoff: Companies That Could Benefit

In 2024, Malaysia's GDP is expected to grow by 4% to 5%. However, Sarawak's growth rate is projected to be higher, reaching 5% to 6%. With the Sarawak government allocating RM9 billion for development in its 2024 state budget, the economic outlook for Sarawak looks very promising. This budget increase signifies the Sarawak government's strong commitment to accelerating regional economic growth and development.

This substantial budget is likely to be used for various development projects, including infrastructure upgrades, support for local industries, and social welfare programs. These initiatives could attract more investment, create jobs, and improve the overall quality of life for the people of Sarawak.

For the stock market, this undoubtedly presents new opportunities. Here are a few areas that might benefit:

📍 Infrastructure Construction: With infrastructure upgrades and expansions, related construction and engineering companies could benefit. This could drive up their stock prices.

📍 Local Industries: The government might provide more support and incentives to promote the development of local industries, which could enhance the profitability of related companies and, in turn, boost their stock prices.

📍 Social Welfare: As social welfare programs are implemented, consumer purchasing power could increase, potentially driving up the stock prices of retail and consumer goods companies.

Here are some stocks related to Sarawak that could potentially benefit from Sarawak's economic takeoff:

📌 $CMSB / 2852 (CAHYA MATA SARAWAK BERHAD)

CMSB is a Sarawak-based conglomerate engaged in cement production, construction materials & trading, construction, road maintenance, property development, ICT, and financial services. This company has historical ties to the late Tun Taib, the former premier and Yang di-Pertuan Negeri Sarawak.

📌 $KKB / 9466 (KKB ENGINEERING BERHAD)

KKB specializes in steel fabrication for buildings and other products used in the construction sector. The company has also diversified into manufacturing steel pipes, pipe specials, and LPG cylinders. This expansion aligns well with the anticipated infrastructure boom in Sarawak, making KKB a likely beneficiary.

📌 $IBRACO / 5084 (IBRACO BERHAD)

IBRACO is involved in property development, construction, and quarry businesses in Sarawak. Like CMSB and KKB, IBRACO stands to gain from the increased infrastructure activities in the region.

📌 $ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)

ADVCON operates as a construction firm specializing in civil engineering and infrastructure projects, focusing on earthworks and related services. In 2023, Advancecon (Sarawak) Sdn Bhd secured a RM45.4 million earthworks contract from Petros Power Sendirian Berhad for the Miri Combined Cycle Gas Turbine (MCCGT) Power Plant Project. This positions ADVCON well for future projects in Sarawak.

📌 $ZECON / 7028 (ZECON BERHAD)

ZECON is involved in construction, water infrastructure, property development, and healthcare & hospital concessions. The company covers a wide range of sectors, including buildings, roads, bridges, and water infrastructure. On 15 March 2024, Zecon and Sarawak Digital Economy Corporation Berhad (SDEC) signed a Memorandum of Understanding to collaborate on the Kota Petra Masterplan, which includes developing an integrated urban area with smart city technologies.

📌 NAIM

Naim is a leading township developer in Sarawak with flagship developments in Miri, Kuching, and Bintulu. As a Class A Bumiputera Contractor with ISO 9001 certification, Naim has also expanded beyond Sarawak into Sabah, Peninsular Malaysia, and Fiji, working on various large-scale projects, including the MRT project in Klang Valley and road rehabilitation projects in Fiji.

KKB Engineering Bhd may have seen earnings which came up short of analyst expectations, but better days may still be ahead for the company.

General Meetings: Outcome of Meeting

$KKB / 9466 (KKB ENGINEERING BERHAD)
Research by MIDF
Buy – TP of MYR 2.13

“Steel Fabrication Leads Earnings”

KKB Engineering Berhad (KKB) registered a core net profit of RM3.9m in 1QFY24, an improvement of +28.3%yoy, driven by stronger results from both its engineering and manufacturing divisions. The results were below ours and street’s expectations at 11.0% and 11.3% of full-year estimates respectively, coming in below expectations.

Analyst(s):
Royce Tan Seng Hooi
royce.tan@midf.com.my

$KKB / 9466 (KKB ENGINEERING BERHAD)
Research by RHB
Buy – TP of MYR 2.11

“A Temporary Blip But Still a Sarawakian Jewel; BUY”

1Q24 core profit of MYR3.5m (+14% YoY) missed our and Street’s estimates – making up 10% of both full-year projections – due to higher-than-expected portion of non-controlling interests (NCIs). Nevertheless, we expect better contributions in the coming quarters to bring overall FY24F earnings growth to 10%, as projects such as the Rosmari & Marjoram (R&M) onshore gas plant in Bintulu project move higher along the S-curve. We still see KKB Engineering as a jewel for its prowess in Sarawak-centric jobs.

Analyst(s):
Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

$KKB / 9466 (KKB ENGINEERING BERHAD)

PETALING JAYA: KKB Engineering Bhd has received a letter of award from PETRONAS Dagangan Bhd for liquified petroleum gas cylinder fabrication and maintenance for PETRONAS worth RM37.9mil.

KUALA LUMPUR: KKB Engineering Bhd’s units have bagged two jobs worth RM37.9 million job from Petronas Dagangan Bhd.

© New Straits Times Press (M) Bhd

PETALING JAYA: KKB Engineering Bhd has received a letter of award from PETRONAS Dagangan Bhd for liquified petroleum gas cylinder fabrication and maintenance for PETRONAS, worth RM37.9mil.

OTHERSLETTER OF AWARD

Annual Report & CG Report - 2023

CIRCULAR TO SHAREHOLDERS IN RELATION TO PROPOSED RENEWAL OF SHAREHOLDER MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

KKB - Notice of Book Closure

First and Final Dividend

OTHERSFIRST AND FINAL SINGLE TIER DIVIDEND

General Meetings: Notice of Meeting

KUALA LUMPUR: KKB Engineering Bhd is well-positioned to be a beneficiary of the rollout of water supply projects in Sarawak. 

© New Straits Times Press (M) Bhd

$KKB / 9466 (KKB ENGINEERING BERHAD)
Research by RHB
Buy (Maintained) – TP of MYR2.02

“A Proxy To Sarawak’s Water Play; Maintain BUY”

Maintain BUY and MYR2.02 TP, 15% upside with c.4% FY24F yield. According to the Sarawak Premier Tan Sri Datuk Patinggi Abang Haji Abdul Rahman Zohari Tun Openg, Sarawak requires an expenditure of MYR1.1bn to upgrade the state’s entire water pipeline system, which would span roughly 2,740km. We are upbeat on this development, as KKB Engineering had previously been involved in water supply-related projects in Sarawak.

Analyst(s):
Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com

Sarawak Allocates RM 1.08bil for pipe upgrades

- Replacement of old water pipes in the distribution network
- about 2700km of piping
- in 2024 alone, expected around RM 247mil
- Sarawak Gov' earmarked RM 1.08bil in total over several years.
- In 2021, NRW is about 45.6% in Sarawak. Mainly due to pipe leakages and non functioning water meters. Targets to reduce it to 25% by 2030.
- Four main bodies: Kuching, Sibu, Laku, and Sarawak Rural water boards.
- The 4 entities are working together to create a unified water supply geographical info system or 3D utility mapping.
- Also plans to develop fully automated Water treatment plants (details unclear)
- Sarawak Water Supply Masterplan and Water Grid Strategy
- In 2017, they had allocated RM 4bil to fund 300 projects to upgrade existing water infrastructure. It was later increased to RM 8.28bil for 600 projects. Most have already been completed.

source: https://cutt.ly/1w4yO5Nl

Which pipe manufacturer has exposure to Sarawak?
$KKB / 9466 (KKB ENGINEERING BERHAD) comes to mind

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - MADAM KHO POH LIN

Changes in Director's Interest (Section 219 of CA 2016) - MADAM KHO POH LIN

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

$KKB / 9466 (KKB ENGINEERING BERHAD)
Research by MIDF
Maintain Buy - Revised TP of RM2.07

"Ending FY23 on A Strong Note"

• Core earnings improved +89.9% to RM26.3m in FY23 on the back of stronger revenue of +21.7% to RM471.0m
• Stronger bottom line lifted by both engineering and manufacturing business segments
• Outstanding order book stands at over RM550m with earnings visibility up to FY25; current active tender book of more than RM290m
• Maintain BUY with an upgraded TP of RM2.07

Analyst(s):
Royce Tan Seng Hooi
royce.tan@midf.com.my

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

OTHERS(1) Recommendation of First and Final Single Tier Dividend
(2) Proposed Renewal of Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ("RRPT") ("Proposed Shareholder Mandate")