The Group is then positioned as a one-stop facility solution provider of turnkey engineering services from the initial system design up to maintenance and servicing after completion.
The Group expanded within the past 19 years and having business divisions of:
1 Ultra High Purity (UHP) Gases Delivery System
- Bulk/special/chemical gas delivery system;
- Gas detection and SCADA;
- Exhaust system
- Tankage construction;
- Underground pipelines;
- Equipment fabrication;
- Steel structure fabrication
4 General Contracting
- Civil construction works;
- Cleanroom construction
According to the Group, Division 1 and 2 delivers higher profit margin than the rest.
KGB has a total workforce of around 300 and has regional offices in China, Taiwan, Singapore and Malaysia. It is a registered contractor with Construction Industry Development Board (CIDB) Malaysia and is certified to ISO 9001:2008 and OHSAS 18001:2007.
Certification is important to mention, as it reflects a company's status in terms of regulatory requirements and its potential to grow.
ISO 9001:2008 is focused on meeting customer expectations and delivering customer satisfaction, as well as continual improvements.
While OHSAS 18001:2007 ensures health and safety of employees and workplace.
To-date, the Group has accumulated a vast track record of completed projects for a myriad of international clients in Malaysia, China, Taiwan, Singapore, Philippines and Indonesia.
It is interesting to know that KGB is reporting impairment loss at least twice in yearly basis.
The impairment loss was incurred from non-received receivables, as well as due from customer on construction contract.
Although the amounts seem non-significant to revenue gained (the most at approximately 5% over the revenue during Q2 2016), the shareholders would certainly happy to see if the loss could be improved over time.
Looking at the short term perspective, KGB has recorded the highest price in history.
The price should stay above the uptrend resistance line to maintain the bullish trend.
Otherwise, it will create a sell down by short term traders for the sake of profit taking.
It will be the best timing to trade-in if the price rebound from the strong support point.
TP: RM1.80
ISO 9001:2008 is focused on meeting customer expectations and delivering customer satisfaction, as well as continual improvements.
While OHSAS 18001:2007 ensures health and safety of employees and workplace.
To-date, the Group has accumulated a vast track record of completed projects for a myriad of international clients in Malaysia, China, Taiwan, Singapore, Philippines and Indonesia.
Financial Highlights
Over the past 4 years, KGB has escaped from profit-lost history and recorded 3 years continuous growth in profit, as well as profit margin.
In view of net profit for FY2017 and FY2018, KGB has achieved growth in 7 out of 8 quarters reported.
Even the only negative quarter was due to the Group has started their new direction to selectively bidding projects which carry higher profit margin.
The Group's effort has been proven effective, when you see the Group generally earned better in FY2018 compared to FY2017.
In financial report Q4 2018, the Group highlighted the ability to pay off most of the short terms debts with a strong net cash position.
Additional Information
It is interesting to know that KGB is reporting impairment loss at least twice in yearly basis.
The impairment loss was incurred from non-received receivables, as well as due from customer on construction contract.
Extracted figures from one of the quarter reports
Although the amounts seem non-significant to revenue gained (the most at approximately 5% over the revenue during Q2 2016), the shareholders would certainly happy to see if the loss could be improved over time.
Impairment loss claimed by quarter
Future Outlook
- KGB's regional operations are mostly carried out in respective local currencies, thus the impact of currency fluctuations on the Group’s earnings has slightly mitigating.
- KGB has secured first on-site 10-years nitrogen gas supply contract from a major manufacturer of solar cells and modules. The business has started to commenced since Q1 2018 and has contributed positively in revenue of Industrial Gases' division.
- Moreover, revenue in coming Q3 2019 onward is expected to contain earnings from new project commencement - manufacturing of liquid carbon dioxide. The Group inked a supply agreement with Petronas to purchase its carbon dioxide gas waste from their Gas Processing Plant (GPP) for a period of 15 years, starting 2019. The Group is building a new state-of-the-art gas plant with a production capacity of 50,000 tonnes per year next to the Petronas GPP in Kerteh, Terengganu to purify and liquidify the CO2 gas waste emitted.
- A RM93 million-worth new contract has just been confirmed from one of the world's largest gas companies to provide turnkey construction works in Singapore.
- The Group continuously highlighted their confident to achieve strong order book replenishment.
- To ensure keeping abreast with the rising competition, the Group has continuously focused on enhancing technical capabilities, improving operating efficiencies and maximising our resources.
- Top thirty shareholders have owned approximately 70% of total shares in the market.
Author's Perception
- There are significant improvements in profit margin performance. The statement is in-line with the management's direction to only involve in bidding high profit margins' projects. Looking forward to double digits' margin in FY2020.
- Also, proven continuous improvements in terms of ability to pay off debts within short terms.
- The business is in healthy growth when new order book acquired is going stronger.
- However, current share price is approximately 2.83 times over-priced than NTA.
Technical Comment
KGB has started the bullish trend since April'18.
Currently, the price is moving in the third Elliot motive wave.
The price is technically expected to reach TP of RM1.80.
However, RM1.25 is a strong support line.
Should the price break below, the uptrend will be ended.
Looking at the short term perspective, KGB has recorded the highest price in history.
The price should stay above the uptrend resistance line to maintain the bullish trend.
Otherwise, it will create a sell down by short term traders for the sake of profit taking.
It will be the best timing to trade-in if the price rebound from the strong support point.
TP: RM1.80
No comments:
Post a Comment