PETALING JAYA: The latest RM292.8mil contract secured by Kerjaya Prospek Group Bhd
for building works in Kuala Lumpur brings its year-to-date job wins to RM1.55bil.
Kenanga Research said it is positive on the latest contract win.
“It is the company’s eighth job win in financial year 2024 (FY24) and its first external job, boosting the outstanding order book to around RM4.7bil.
“Meanwhile, its tender book stood at RM4bil, comprising RM2bil building jobs (although 70% are related-party transaction) and three industrial jobs including data centre bids worth RM2bil,” said Kenanga Research in a report yesterday.
However the research house said the group was not keen to bid for external infrastructure jobs. Kerjaya Prospek had secured the RM292.8mil contract from a repeat client, UEM Sunrise Bhd.
This contract involves the construction and completion of a 57-storey serviced apartment.
This entails one block of serviced apartments comprising 1,126 units, eight levels of podium parking, one level of subbasement, a facilities floor and a security room.
The project will begin on Sept 17 and is slated for completion within 38 months, the group said.
Meanwhile, TA Research estimates that the project is expected to contribute a net profit of circa RM29.3mil throughout the construction period assuming a three-year historical net margin of 10%.
Given the strong order book replenishment for the nine-month period, TA Research has revised FY24 order book replenishment assumption from RM1.6bil to RM1.8bil.
“Consequently, our FY24, FY25 and FY26 earnings estimates have been adjusted higher by 2.5%, 2.3% and 2.8%, respectively. Following the earnings revision, we raised our target price to RM2.79 from RM2.73, based on 18 times 2025 earnings per share and 3% environmental, social and governance premium given our four-star rating,” it added.
The research house said it continues to like Kerjaya Prospek for its solid earnings visibility, consistent and robust replenishment of its order book and the potential growth in industrial property construction leveraging the partnership with Samsung.
As for Kenanga Research, it is keeping the stock’s target price at RM2.24, valuing the group’s construction business unchanged at 16 times forward price-to-earnings ratio.
This is at a discount to the 20 times it ascribed to large contractors such as Gamuda Bhd, IJM Corp Bhd and Sunway Construction Group Bhd.
The reason for the discount is due to Kerjaya Prospek’s focus on the high-rise building sector which is currently weighed down by oversupply in the office and residential segments.
That said it maintains an “outperform” call on the stock, noting that it also offers attractive dividend yields of more than 5%.
Analysts said Kerjaya Prospek’s current outstanding order book of RM4.7bil will provide revenue visibility until 2028.
