KUCHING: MIDF Amanah Investment Bank Bhd (MIDF Research) is positive on KKB Engineering Bhd (KKB) receiving RM53 million contract award from the Kuching Water Board (KWB) for the proposed construction, completion and commissioning of water supply from Jalan Batu Kawa/Matang to and fro Matang Mid-Level Reservoir for Sarawak Water Supply Grid Program.
The contract period for the water supply job is 16 months, commencing from May this year and subject to the final approval by the state government.
MIDF Research in a note yesterday estimated that KKB’s current outstanding order book stood at approximately RM888 million.
“The group’s orderbook stood at RM835 million as of April 2020. In recognition of this new contract worth RM53 million, we arrived to a sum worth RM888 million for KKB’s outstanding order book,” said head of strategy Kifni Kamaruddin.
“Moreover, it is worth noting that the new water supply job contract will strengthen its water-related infrastructure construction segment.”
Year-to-date, KKB has been awarded four contracts worth RM338 million, specifically the contracts from Petronas Carigali Sdn Bhd, PTTEP Sarawak Oil Ltd, Sarawak Energy Bhd and Kuching Water Board.
“The new water supply job contract is expected to contribute positively to the earnings and net assets of KKB for the duration of the contract,” the head of strategy added. “However, we make no changes to our earnings estimates as the value of the new job secured is within our contract replenishment assumptions.
“Moving forward, we consider the prospect of KKB business to be exciting, fuelled by the potential roll out of Sarawak infrastructure packages. Downside risks include supply chain disruptions due to the current Conditional Movement Control Order implementation.”