Upside forecast for Kelington

PETALING JAYA: Kelington Group Bhd (KGB) is tracking toward a record-breaking financial year, supported by an expanding global footprint and a massive RM7.5bil tender pipeline.

Research houses remain bullish following KGB’s first-half of financial year 2026 (1H26) results, which saw core net profit grow 20% to 21% year-on-year (y-o-y) to roughly between RM71mil and RM72mil.

Results came in strictly within expectations, accounting for 35% to 37% of full-year estimates.

Analysts expect a significantly stronger second half based on historical seasonal trends.

KGB declared an interim dividend per share (DPS) of three sen, bringing 1H26 DPS to six sen.

Both Kenanga Research and RHB Research maintained “buy”-equivalent ratings, lifting or maintaining target prices on strong execution visibility.

Kenanga Research maintained its “outperform” rating while raising its target price (TP) from RM9.05 to RM10.10.

It upgraded financial year 2026 (FY26)/FY27 earnings projections by 1.6% and 12.3% to RM197mil and RM249mil respectively, citing higher gross profit margins and revenue growth.

RHB Research has maintained its “buy” call on the stock with an unchanged TP of RM10.50. It projects a 20% earnings compound annual growth rate (CAGR) over FY25-FY28, valuing the counter at 35 times FY27 earnings per share.

Both research houses cited ultra-high purity (UHP) dominance, where advanced engineering UHP remains KGB’s core revenue engine – 65% of total revenue. Surge in regional project activity notably Singapore up by 42% and Taiwan up by 160% helped offset strategic pullbacks in China, both noted.

KGB’s year-to-date August contract wins touched RM1.76bil, surpassing previous full-year records, holding an outstanding order book of RM2.02bil to RM2.04bil.

“KGB’s RM7.5bil tender book is heavily anchored in Singapore and India, which together represent roughly 77% of total opportunities,” both research houses noted.

Key near-term catalysts expected in the fourth-quarter of 2026 (4Q26) include Micron’s 10B/10E expansion in Singapore and a RM1bil Indian logic-fab hook-up package.

KGB’s next destination is Japan. “KGB is actively positioning for Japan’s semiconductor resurgence, targeting hook-up contracts for government-backed Rapidus’ 2nm logic fab project,” explained RHB Research.

Despite minor tender rationalisation as management prioritises higher-margin opportunities, both research houses noted that KGB’s strategic positioning within the front-end global semiconductor value chain ensures long-term margin accretion and earnings resilience.