Kimlun Corp Bhd has emerged as one of the top performers on Bursa Malaysia, if not among newly-listed companies. Its share price has advanced 67% from its initial public offering (IPO) price of 97 sen to close at RM1.62 on Wednesday, underpinned by a growing order book that has attracted institutional investors.
The Johor Bahru-based company, which focuses on property, infrastructure and heavy engineering projects, made its debut on Bursa Malaysia’s Main Market on June 29.
Its CEO Sim Tian Liang told The Edge Financial Daily that the company had attracted interest from foreign funds — mostly Singapore. Still, he thinks there is potential for foreign shareholdings to grow as they currently hold below 5%.
“About 17% of the company’s shares are held by institutions,” he added.
Kimlun’s major shareholders are executive chairman Pang Tin, who owns 40.86%, or 93.67 million shares. The free float for the company’s shares is estimated at 48.8%.
Sim said Kimlun’s order book was about RM760 million as at Aug 31, 2010. Construction jobs accounted for RM680 million and the rest were from supply contracts for precast housing projects and precast concrete lining for tunnels of the Singapore mass rapid transit (MRT) extension.
Excluding the RM760 million, Kimlun recently was awarded a RM70 million contract from Malaysian Resources Corp Bhd to build the Marlborough College East in Iskandar Malaysia. The Marlborough College East contract involves the construction of main building works and the targeted completion date is January 2012.
It was also awarded a RM65 million contract from S P Setia Bhd for two blocks of 25-storey serviced apartments in Bukit Indah, Nusajaya, Johor. The contract comprises 354 apartment units, including car parks and is due to be completed by September 2012.
Sim said Kimlun had been invited by several parties to put in bids for projects.
“We have sent out bids for RM700 million construction projects, comprising housing and infrastructure jobs,” said Sim, who sees more jobs ahead for the company, especially from Iskandar Malaysia.
He added that Kimlun was bidding for high-end and medium-range housing projects in the Iskandar region, Johor Bahru and the Klang Valley.
In a recent research note, Hwang DBS Vickers Research said Kimlun was a potential beneficiary of the ongoing Iskandar Malaysia development, given its presence and established track record. “Kimlun is actively bidding for over RM1 billion worth of contracts in Iskandar Malaysia and we expect more contracts to be awarded (from there) over the next three months,” it said.
The proposed RM35 billion MRT for Kuala Lumpur has also drawn interest from Kimlun, which hopes to get part of the precast concrete lining orders for the tunnels. The company’s expertise in providing the concrete lining and track record in Singapore should give it an edge.
Hwang DBS Vickers Research said Kimlun was also bidding to supply RM160 million worth of precast concrete products to the Singapore MRT project. Its involvement in the Singapore project could strengthen its track record in grabbing a slice of the RM30 billion Malaysia’s MRT project identified under the “Greater KL” Entry Point Projects.
The research firm said Kimlun delivered an above average net margin of 7% versus the construction sector’s 6% — it is more cost-efficient because of its upstream operation.
It said Kimlun’s RM33.8 million net cash position (excluding proceeds from the listing exercise) and growing order book would provide visibility for the company’s earnings in the financial year ending Dec 31, 2011.
This article appeared in The Edge Financial Daily, October 13, 2010.
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