KUALA LUMPUR (March 25): Kelington Group Bhd’s (KL:KGB) latest contract win strengthens its foothold in India and cements strong earnings visibility, analysts said.
The contract announced on Tuesday is expected to generate gross profit of up to RM96 million over the next three years, according to Berjaya Research. The win also puts Kelington on track to meet its own target of securing new orders worth up to RM2 billion for 2026, Kenanga Investment Bank added.
“Looking ahead, we expect Kelington to capitalise on expanding their presence in India, underpinned by the country’s rapidly growing semiconductor industry,” Berjaya Research said in a note.
Kelington is riding on a wave of new fab projects sweeping across the globe amid a major push for ‘semiconductor sovereignty’ in an industry fraught with geopolitical and trade tensions as well as fragile supply chain.
In India, the government has launched an initiative backed by incentives and investments of around US$10 billion to turn the country into a global hub for semiconductor design, manufacturing, and technology development.
On Tuesday, Kelington secured a contract valued at US$105 million, or about RM414 million, for a turnkey gas distribution system that forms a critical part of a semiconductor fab’s core infrastructure for an unidentified client in India.
Coupled with an earlier US$10.4 million purchase order for gas purifiers for the same facility, Kelington has total confirmed wins for the Indian project totalling US$115.4 million.
The company has also secured three letters of intent worth US$17 million for additional scope, “which could further enlarge its participation once converted into firm contracts”, Kenanga added.
Shares of Kelington were barely changed this year after rallying nearly 50% last year. All six research houses tracked by Bloomberg, however, are still bullish on the stock. The average target price is RM6.40, indicating an upside of 26% from its last price of RM5.08 on Wednesday.