KKB Engineering set to clinch more jobs in Sarawak

PETALING JAYA: Affin Hwang Capital said prospects for KKB Engineering Bhd to expand its construction order book are good given the Sarawak government’s plan to accelerate infrastructure spending to improve the water supply and road network in the state.

The KKB-WCT joint venture (JV) is undertaking a RM1.3 billion civil works package for the Pan Borneo Highway (Sarawak stretch) project.

Given the good working relationship with its partner WCT Engineering, the JV is bidding for other road projects in Sarawak such as work packages for the RM5 billion Second Trunk Road and RM5.2 billion Sabah-Sarawak Link Road projects.

Under the Sarawak Water Grid project, KKB is also bidding for more water pipe-supply and pipe-laying packages to replenish its order book.

Affin Hwang said KKB is one of the largest suppliers of steel pipes (large diameter) in Sarawak and this puts the company in a strong position to win pipe-laying projects.

Of its current tender book of RM510 million, water and civil engineering projects comprise about RM156 million.

KKB management is upbeat on the near-term oil & gas outlook as it is spending RM25 million to RM30 million over 2019-2020 to upgrade its current fabrication yard, allowing it to execute more projects simultaneously.

Affin Hwang said as of September 2019, KKB has net cash of RM89.8 million, translating to 35 sen per share.

“While the company has no formal dividend policy, it has been paying out an average 4 sen per share since FY14, which implies a net dividend yield of 2.8%.”

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