PETALING JAYA: Kerjaya Prospek Group Bhd
is in a sweet spot to secure more jobs in the coming months, backed by its RM2bil tender book.
The substantial tender book not only consists of residential buildings, but also data centres and semiconductor-related facilities which could be clinched via its collaboration with Samsung C&T, RHB Research said.
In its report yesterday, the brokerage said Kerjaya Prospek’s short-term prospects could come from the Arica project with a gross development value of RM400mil in Penang.
This was the second development project under Seri Tanjung Pinang phase two (STP2) worth RM200mil.
“We forecast a three-year-earnings compounded annual growth rate of 15%, backed by its steady job replenishment prospects,” RHB Research said.
It projected a dividend yield of around 6% for 2024 from Kerjaya Prospek’s shares, citing the management’s dividend target of two sen per share per quarter in 2023.
Nevertheless, RHB Research revised downward its earnings forecast for Kerjaya Prospek by 3% for 2023, and 5% each for 2024 and 2025.
The revision was to reflect the brokerage’s lowering the 2023 job replenishment target to RM1.3bil, from RM1.8bil, previously, to reflect conservatism.
This is in addition to the exclusion of the RM404mil job from BCM Holdings Sdn Bhd – a subsidiary of Ecofirst Consolidated Bhd; a higher sales assumption for its property arm.
Despite the revision, RHB Research said Kerjaya Prospek’s 2023 earnings growth remained above 10%, and its effective year-to-date job wins totalled RM1.2bil.
“We believe that Kerjaya Prospek could likely win small contracts by the year-end,” it said.
RHB Research maintained its “buy” call on Kerjaya Prospek, with a lower sum-of-parts (SOP)-based target price of RM1.71 from RM1.78 previously.
Similarly, Kenanga Research kept its “overweight” rating on Kerjaya Prospek with a lower SOP-based target price of RM1.67 from RM1.75 previously.
The brokerage also lowered its job win assumption for Kerjaya Prospek from RM1.7bil to RM1.2bil in 2023 and from RM1.6bil to RM1.5bil in 2024.
However, it raised its net dividend per share to eight sen for 2023 and 10 sen for 2024 from the previous six sen for both years.
“We continue to like Kerjaya Prospek for its innovative construction solutions and lean cost structure that translate to above-average margins; hands-on management team and track record of strong execution; and ability to consistently win external jobs and the availability of job orders from related parties,” Kenanga Research explained.
Kerjaya Prospek’s net profit rose to RM96.55mil for the first nine months of 2023 from RM86.2mil in the previous corresponding period, while revenue climbed to RM968.75mil from RM836.91mil.
UOB Kay Hian Research said Kerjaya Prospek stood ahead of its peers, given its lower dependence on government jobs, ability to bag private sector projects and steady internal job flows.
“This ensures its earnings visibility in the long term amid slower infrastructure job flows.
“Kerjaya Prospek also offers a decent dividend yield of 3% to 4%.
“This is underpinned by superior margins of 10% to 11%; sustainable order-book cover ratio of four times of 2022 revenue; and a sturdy balance sheet with a net cash position of RM204mil or 16 sen per share as of end-September 2023,” the brokerage explained.
