KGB - 5 years of sharpening the sword, Industrial Gas Plant 2 drives growth and stock prices!
KGB's own business includes ultra-high purity (“UHP”) gas and chemical delivery systems, General Contracting & Process Engineering.
In 2018, the company raised capital through Private Placement to build the first liquefied carbon dioxide plant 🏭 to generate continuous passive income. Plant 1 was completed in 2019, so you can see that 2019 CAPEX was a record high of RM33.5 mil.
With management's efforts, the industrial gas business can contribute more than RM15 mil of PAT in FY2022. It is expected to be between RM25 and 30 mil in 2023, with a gross margin of up to 30%. Although its turnover accounts for only 7% of the company, it contributes nearly a quarter of its profits.
Due to strong demand for liquefied carbon dioxide, the company began construction of Plant 2 in 2022. P2 has a production capacity of 70,000 MT, 40% more than Plant 2's 50,000 MT, and a total production capacity of 120,000 MT. As a result, CAPEX in 2023 once again broke through a record high of RM69.17 mils, and Plant 2 also began operation in March 2024.
FY2023's Plant 1 production capacity reached 100%, and Plant 2 began production at the end of March 2024. It is expected that production capacity will increase to 60,000 MT for the whole of 2024, and increase year by year thereafter.
KGB handed over a record high of PAT for two consecutive quarters, so the parent stock price rose 90% and WB rose more than 200% since the results were released at the end of November.
Market sentiment was positive this year. KGB's stock price broke through a record high of RM2.85, and the closing price was RM2.84. In the annual report, management mentioned that grwoth momentum will be maintained, and it is expected that the company's margin will increase with Plant 2's contribution. Coupled with the recovery in the semiconductor sector, it is expected that many new UHP and other contracts will be obtained in the second half of the year.
No matter how good the company is, in the end, it still depends on whether the performance at the end of this month meets the standards and grows, so we can support the stock price and look forward to the results at the end of May.
📌 Maintaining itself from holding KGB-WB in 2022 until now
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