Seasonally, local sales will be supported by the higher demand ahead of the yearend festive seasons. We reckon that the export market recovery towards prepandemic levels (c. 60.0% of total revenue) may remain challenging for the time being. Meanwhile, the on-going adoption of automation and digitalisation process is expected to see net margins returning to above the low-teens level in FY23f.

Prospects remains buoyant as KGB is equipped with an outstanding orderbook of approximately RM2.22bn. This which represents an orderbook-to-cover ratio of 4.3x against FY21 revenue of RM517.7m that will provide strong earnings visibility over the next 2 years. Meanwhile, tenderbook stays healthy at approximately RM1.50bn that is skewed towards the semiconductor space.

Moving forward, ECONBHD's outstanding orderbook stood at approximately RM450.0m; represents an unbilled orderbook-to-cover ratio at 1.2x against FY22 revenue of RM373.4m will provide earnings visibility over the next 18 months. Meanwhile, tenderbook remains relatively stable at approximately RM400.0m.

Trip to the East. We recently took a trip to East Malaysia and came away feeling fruitful of the journey after being equipped with better insights of the operating landscapes at Sabah and Samalaju Industrial Park, Sarawak. We were briefed on the current operations, future plans and undertook site visits over 4 companies, namely; Suria Capital Holdings Bhd (SURIA), OM Holdings Ltd (OMH), Cahya Mata Sarawak Bhd (CMSB) and Bintulu Port Holdings Bhd (BIPORT).

Sunview Group Bhd is a local solar energy services provider that has completed 98 EPCC of rooftop solar PV facility projects and the provision of construction and installation for 6 LSS PV plants as a subcontractor. Sunview is valued by pegging its FY24f core EPS of 4.8 sen to P/E of 13.0x, leading to a FV of RM0.63.

Together with the aforementioned contract, ECONBHD’s orderbook replenishment year-to-date stands at RM83.5m. This makes up to 33.4% of our expectations of RM250.0m for FY23f. We reckon that future jobs will accelerate moving into subsequent months as property launches over the past 2 years that were held off will take place in this and next year.

We made no changes to our FFB production assumption of 280,000MT (1HFY23 numbers makes up to 44.4% of our assumption) as we enter into the seasonally high production cycle months. Optimal productivity, however, will be challenging amid the acute labour shortages as only 12.0% of the registered 400,000 foreign workers for all economic sectors have entered into Malaysia since January 2022.

CGB will be leveraging on the rising demand for adhesive tapes as the group is already operating a maximum capacity and looks to ramp up their production by 3.5x to 70.0m sqm of tapes p.a. Turnaround in FY22f is largely on the cards, backed by the construction segment’s outstanding orderbook of RM410.1m, while FY23f will gain further strength from their on-going manufacturing segment expansion plans. CGB could justify by pegging its FY23f EPS of 14.3 sen to P/E of 9.0x, arriving at a fair value of RM1.29.