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-- 120.790 KGB - A leap forward every 5 years. Industrial Gas Plant 2 drives growth and stock price!
KGB's business includes the delivery system of ultra-high purity (UHP) gases and chemicals, General Contracting & Process Engineering.
In 2018, the company raised funds through a Private Placement to build its first carbon dioxide liquefaction plant 🏭, creating a sustainable passive income. Plant 1 was completed in 2019, so you can see that the CAPEX for 2019 was a historical high of RM33.5 million.
With the management's efforts, the industrial gas business contributed over RM15 million in PAT in FY2022, and is expected to reach between RM25 - 30 million in 2023, with a high gross margin of 30%. Although it only accounts for 7% of the company's revenue, it contributes nearly a quarter of the profit.
Due to strong demand for liquefied carbon dioxide, the company started the construction of Plant 2 in 2022. P2 has a capacity of up to 70,000 MT, which is 40% more than Plant 2's 50,000 MT, with a total capacity of 120,000 MT. Therefore, the CAPEX for 2023 reached a new historical high of RM69.17 million, and Plant 2 will commence operation in March 2024.
Plant 1's capacity reached 100% in FY2023. Plant 2 is scheduled to start production in March 2024, and it is expected that the annual capacity will increase to 60,000 MT in 2024, with further increases in the following years.
KGB has achieved record high PAT for two consecutive quarters, resulting in a 90% increase in the share price of the parent stock and a 200% increase in WB.
This year's market sentiment is optimistic, with KGB's stock price breaking a historical high of RM2.85 and closing at RM2.84. The management mentioned in the annual report that they will maintain growth momentum, and it is expected that Plant 2 will contribute to an improvement in the company's margin. In addition, with the recovery in the semiconductor sector, there is expected to be many new UHP and other contracts in the second half of the year.
No matter how good the company is, its growth will ultimately depend on whether it meets the performance target at the end of the month, which will support the stock price. Looking forward to the performance at the end of May.
📌 I have been holding KGB-WB since 2022.
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JACKmusk : fly
wjwong : Nice