KUALA LUMPUR (Sept 15): Kelington Group Bhd shares rose as much as 23 sen or 15.97% to RM1.67 morning trade today after the engineering solutions provider announced yesterday it secured a construction contract worth RM420 million.

At 10:03am today, Kelington pared gains to RM1.66 with some 19.83 million shares traded.

At RM1.66, the group has a market value of about RM935.6 million.

Kelington yesterday said its wholly-owned subsidiary Kelington Technologies Sdn Bhd had received an award of contract from a manufacturing company at Sama Jaya Free Industrial Zone in Kuching to undertake the construction work with respect to its Sarawak Expansion Project.

The works will commence in mid-September 2021 and are expected to be completed by Dec 31, 2022.

Kelington expects the contract to contribute positively to the earnings and net assets of the group for the financial years Dec 31, 2022 and 2023.

Kenanga Research analyst Samuel Tan said in a note today, inclusive of this recent win, Kelington has secured a record-breaking RM764 million (versus FY19 of RM490 million) new job wins in 2021, exceeding his expectation of RM500 million.

“Its outstanding order-book has ballooned to another all-time high of RM822 million, which is more than double of FY20 revenue.

“Its order-book has grown very close to its current market capitalisation,” he said.

He anticipated the group to achieve back-to-back record revenue and earnings for FY21 and FY22 as it is able to enjoy economies of scale and better margin for its projects.

He reiterated his positive view on Kelington as he expects more fab expansion to come and Kelington is in a favourable position to benefit from more ultra-high purity jobs, with the management showing no signs of slowing down in terms of securing new jobs.

According to him, the group’s tender-book remains elevated at RM1.1 billion.

Tan also raised Kelington's FY21 to FY22 earnings by 4% and 33% to RM32.3 million and RM47 million, representing growth of 85% and 46%, respectively.

He maintained "outperform" on Kelington and revised up its target to RM2.50 from RM1.50.

“Kelington remains our top hidden gem pick owing to its healthy job pipeline and secular growth story,” he said.