KKB: bottom-line soared

Results Update

For QE31/3/2015, KKB's net profit increased by 220% q-o-q or 602% y-o-y to RM26.7 million while revenue rose 16% q-o-q or 80% y-o-y to RM75.7 million. The  overall  improved revenue  and operating results was mainly driven by the Group’s Steel Pipe manufacturing business and Steel Fabrication division.

The Steel Fabrication division recorded a revenue of RM10.4 million (4Q15: RM5.9 million, 1Q14: RM19.5 million) which were derived from the additional, balance on-going projects involving the fabrication of structural steel works for Petronas LNG Train 9 Project, the fabrication of steel frame works for CMS Clinker Plant, the supply of Low/High Tension Steel Poles and subcontract works for the fabrication of platforms.

The Steel Pipes manufacturing business under the two subsidiary companies, recorded an aggregate revenue of RM62.3 million (4Q15: RM55.6 million, 1Q14: RM16.5 million). The increased revenue is attributed from the on-going supply of Polyurethane Lined Mild Steel Pipes and other short notice pipe supplies.

Table 1: KKB's last 8 quarterly results


Chart 1: KKB's 31 quarterly results

Valuation

KKB (closed at RM1.64 yesterday) is trading at a trailing PE of 9.6 times (based on last 4 quarters' EPS of 17 sen). At this multiple, KKB is reasonably valued. It can command a PE of 12 times.

Technical Outlook

KKBhas rebounded off the lower line of an expanding triangle- a fairly irregular price formation. It is possible, though not probable, that KKB may go to test the upper line of the triangle (at RM3.00).


Chart 2: KKB's weekly chart as at April 27, 2015 (Source: ShareInvestor.com)
 
Conclusion

Based on improved financial performance, fairly attractive valuation & mildly positive technical outlook, KKB could be a good stock to consider for investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, KKB