KUALA LUMPUR: RHB Research believes Kimlun Corp Bhd's valuation remains attractive as it expects near-term replenishment opportunities coming from infrastructure projects.The research house said it has adopted a more sanguine outlook in light of the recent signing of the Johor Bahru-Singapore Rapid Transit System project, North-South Corridor and Jurong Region Line."We think the valuation remains attractive at 7.8x FY21F EPS, a c.17% discount to small-cap construction peers’ CY21F P/E," it added, while maintainng its "buy" recommendation on the stock.Its target price was kept at 93 sen per share, which represents 9% upside with 1% forecast FY20 yield.Meanwhile, Kimlun has announced the acquisition of two plots of freehold commercial land in Bandar Seri Alam from Seri Alam Properties for RM40.5mil cash.RHB views the purchase price of about RM83.61psf as attractive given the asking price of RM145psf for ap arcel of commercial land near Bandar Seri Alam as detailed in the Bursa Malaysia announcement.However, the research house is cautious over the rising debt given Kimlun's back-to-back land acquisitions amid a sluggish property market."Assuming that 60% of the MYR40.5m will be funded via bank borrowings, this would raise Kimlun’s gearing ratio by approximately 0.03x based on audited FY19numbers," it said.Kimlun had purchased land in Johor for RM82.1mil for development purposes in 2019.A further purchase of a 49% stake in Bayu Damai Equity (RM40mil) and two land parcels (valued at RM36mil) in Johor remains ongoing and are likely to fully hit its books by end FY20, said RHB.
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