RHB Investment Bank Bhd (RHB Research) has maintained its BUY recommendation for KKB Engineering Bhd as the company is poised to benefit from Sarawak's growing development expenditure which has increased to RM10.8 billion for 2025 from RM9 billion previously.

On that note, the research house has revised KKB's target price to RM1.86, a 17% upside.

However, RHB Research has cut KKB's FY24-FY26 earnings estimates by 13.5%, 5% and 8%, respectively, due to adjustments in non-controlling interest estimates and a reduced job replenishment target of RM250 million for FY24, down from the previous RM300 million.

Despite these adjustments, KKB remains well-positioned to benefit from upcoming infrastructure developments in Sarawak, particularly in the energy sector, which is projected to see significant growth.

The company's outstanding order book stood at approximately RM165 million by the end of the third quarter (3Q), a decrease from RM300 million at the end of 2Q. However, its tender book, valued at RM295 million, offers the potential for further growth, with KKB expected to participate in additional bids worth RM350 million by the end of 4Q24.

RHB Research is optimistic about KKB's prospects, with its involvement in Sarawak's burgeoning oil and gas sector, and a strong pipeline of upcoming projects.

The group is poised to capitalise on Sarawak's continued growth, with a projected GDP of over RM60 billion by 2030, offering a significant long-term opportunity for the company.