KUALA LUMPUR: RHB Research remains upbeat about Kelington Group Bhd's (KGB) earnings prospects given its current dynamics within the technology sector.
KGB has said it will be expanding to Hong Kong and Germany.
The research firm believes the company's foray into new markets will provide significant opportunities for the group, especially with the latter expected to capture potential jobs from the European region.
"Gross profit margins in these markets are expected to be as high as those in Malaysia and Singapore (c.15 per cent for the engineering segment).
"Currently, the group has RM400 million and RM70 million worth of tenders in Hong Kong and Germany.
"We view the expansion positively given KGB's strong track record with European fabs that have operations locally and in Singapore," it said.
Meanwhile, RHB said KGB's liquid carbon dioxide (LCO2) segment has seen tremendous growth, underpinned by robust demand in Oceania markets.
With an additional 70,000 tonne capacity from the second plant (to commence in mid-March), KGB will become the largest local LCO2 producer.
"Looking ahead, the group will explore new markets in Indonesia to expand its overseas presence, driven by growing demand.
"With double the margin of the industrial gases (IG) segment compared to the conventional business, expanding IG operations will further boost its margin.
"Our forecasts remain unchanged as we incorporate better margin assumptions into our estimates. Keep buying the stocks with a target price of RM3.03," it added.
