KUALA LUMPUR: Analysts have upgraded their target price and earnings forecast for Kerjaya Prospek Group Bhd
following its recent RM293mil construction contract.
Kerjaya Prospek announced on Wednesday that its wholly-owned subsidiary Kerjaya Prospek (M) Sdn Bhd has secured a contract from Mega Legacy (M) Sdn Bhd, a subsidiary of UEM Sunrise Bhd, for a building project in Batu, Kuala Lumpur for RM292.8mil.
Philip Capital Research said the latest contract win brings Kerjaya Prospek’s outstanding order book to RM4.7bil, translating to a healthy 3.2x cover of 2023 revenue, providing earnings visibility over the next four years.
“We expect this project to contribute a total of RM29mil patami across 2025-27, assuming a group blended 10% profit after tax margin. Inclusive of this win, Kerjaya has secured a year-to-date (YTD) contract win of RM1.5bil, meeting management’s and our previous RM1.5bil order book replenishment target for 2024.
“We expect another construction contract of circ RM100mil value from KPPROP’s upcoming Shah Alam project, which has an estimated gross development value (GDV) of RM175mil, and is expected to be launched in 1Q25,” Philip Capital said.
The research house has raised the 2025-26E earnings forecast by 2–3% after considering higher-order book replenishment of RM1.8biln for 2024.
“After the earnings upgrade, we raised our SOP-derived target price to RM2.65 (from RM2.60). Maintain buy. We remain positive on Kerjaya’s earnings prospects, supported by the robust contract flows from E&O and
KPPROP, as well as ongoing industrial-related tender opportunities, including several data centre and semiconductor jobs with a combined tender value of RM3bil,” it said.
It also noted key downside risks, such as lower-than-expected order book replenishment and deteriorating project margins.
Meanwhile, TA Securities said the latest contract win marks the eighth contract secured by Kerjaya in 2024, bringing its total YTD new job wins to RM1.54bil.
“This achievement represents 96.7% of our initial FY24 new job win assumption of RM1.6bil. As a result, we estimate the group’s current outstanding order book to stand at approximately RM4.7bil, equivalent to 3.2x FY23 revenue,” it said.
Assuming a 3-year historical net margin of 10%, this project is expected to contribute a net profit of circa RM29.3mil throughout the construction period.
TA has revised its FY24 order book replenishment assumption from RM1.6bil to RM1.8bil, reflecting the strong order book replenishment observed in 9MFY24.
“Consequently, our FY24/25/26F earnings estimates have been adjusted higher by 2.5%/2.3%/2.8%, respectively.
“Following the earnings revision, we raised our target price to RM2.79 from RM2.73, based on 18x CY25 EPS and 3% ESG premium given our 4-star rating,” it said.
