Kerjaya Prospek comes closer to meeting replenishment target

KUALA LUMPUR: Kerjaya Prospek Group Bhd’s recent job wins that are worth a combined RM46mil puts the construction group another step closer to its projected replenishment targets for the year.

Kenanga Research said the total year-to-date new wins of RM984mil come to 66% of its FY23 full-year job win target of RM1.5bil.

With the addition of the latest two contracts, the group’s outstanding order book also rose to RM4.4bil.

Kenanga said it is positive on the win, but maintained its forecasts as the two contract wins are within its job win assumption. It maintained “buy” on Kerjaya Prospek with a target price of RM1.50.

It said it valued the construction business at 13x forward price-earnings ratio at a discount to 14x-18x it ascribes to mid-sized and large contractor such as Gamuda Bhd, IJM Corp Bhd and Sunway Construction Bhd as Kerjaya Prospek’s focus is on the high-rise building sector, which is currently weighed down by an office and residential oversupply.

“We continue to like Kerjaya for its innovative construction solutions and lean cost structure that translate to above-average margins, its hands-on management team and track record of strong execution and its ability to consistently win external jobs and the availability of job orders from related parties,” it said.

Yesterday, Kerjaya Prospek announced it had secured two related-party contracts worth a total of RM46mil from Eastern & Oriental Bhd’s indirect subsidiaries.

These comprise a RM24.7mil job for Eastern & Oriental Express Sdn Bhd for earthworks for the proposed Elmina mixed development in Sector U17, Shah Alam, and a RM21.3mil award for infrastructure works for the proposed Seri Tanjung Pinang Phase 2A Development in Penang.

The completion timeline for the first contract is expected to be 17 months from the scheduled commencement date of Oct 1, 2023, while the second contract is anticipated to be completed within 12 months from Sept 18, 2023.