Thursday 28 Mar 2024
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KUALA LUMPUR (Aug 7): Shares in KKB Engineering Bhd fell as much as 16 sen 9.2% today, as it appears to be tracking the FBMKLCI's downward trend, after posting lower second quarter earnings yesterday (Aug 6).

At 3.12pm, the liquefied petroleum gas cylinder and steel pipe manufacturer pared some losses and was trading at RM1.61, after dipping to a low of RM1.58 in the morning trades.

At the current price, it is still down 13 sen or 7.5%, after 1.38 million shares having changed hands, giving it a market capitalisation of RM415.04 million.

In its filing with Bursa Malaysia yesterday, KKB Engineering’s net profit for the second quarter ended June 30, 2015 (2QFY15) fell 12.25% to RM6.66 million or 2.59 sen per share, from RM7.59 million or 2.95 sen per share a year earlier.

Revenue for the three months through June 30 was down 37.85% to RM30.12 million, from RM48.47 million in 2QFY14.

For the half year (1HFY15), its net profit however grew by 192% to RM33.33 million or 12.93 sen per share, against RM11.39 million or 11.39 sen per share in 1HFY14, on contribution from its steel pipes manufacturing division and steel fabrication division.

Revenue for the period improved to RM106.84 million — 17.3% higher from RM91.09 million last year.

In a note to clients today, AmResearch said KKB Engineering's 1HFY15 results beat expectations.

"While the results was positive, we maintain our forecasts for now, given that the next two quarters are expected to be flat, in view of depleting conventional jobs in hand, and the timing of contracts," the firm said.

It remained confident in KKB Engineering's ability to secure rural development jobs, particularly in the supply of steel pipes, in the lead-up to the impending state elections.

"We also remain optimistic about its 43%-owned associate Oceanmight's prospects in securing oil and gas (O&G) fabrication jobs, notwithstanding the current bleak outlook in the O&G sector," the note read.

AmResearch estimated KKB Engineering's outstanding order to be at about RM30 million.

"For now, we maintain our FY15 order assumptions at RM250 million for its conventional activities and at RM150 million for its O&G outfit," it added.

"While order replenishment is likely to fall short for the conventional steel engineering segment, it may yet still surprise on the upside for the O&G segment. Our numbers may be adjusted upwards, if it is successful in securing jobs, including O&G contracts, within third quarter of 2015 (3Q15)," it noted.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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