This article first appeared in The Edge Financial Daily on April 3, 2018

KKB Engineering Bhd
(April 2, 93.5 sen)
Maintain neutral with a target price (TP) of 95 sen: KKB Engineering Bhd (KKB) via its subsidiary company, OceanMight Sdn Bhd (OMSB), has secured a contract from Petronas Carigali Sdn Bhd for the provision of engineering, procurement, construction and commissioning of wellhead platforms for D18 Phase 2 project and D28 Phase 1 project. The contract duration is approximately 21 months, in which nine months are for the work execution for D28 Phase 1 Project while another 12 months are the warranty period. We understand that the contract will commence in March 2018. No contract sum was disclosed however. Earnings are kept unchanged for now. We maintain “neutral” call and target price (TP) pegged at around 0.9 times to book value, suggesting fair value of 95 sen.

Scope of works. The scope of works for the new job win, among others, includes engineering, procurement, construction, transportation, installation and commissioning. Although no contract sum was disclosed, we understand that it was vying for 3 oil and gas jobs worth RM230 million since last year. Hence, the new job should have a contract sum in excess of RM50 million in our view. This new job win is timely for the Group’s engineering business as oil and gas-related jobs in hand have already reached the tail end. — PublicInvest Research, April 2