Kerjaya Prospek Group Berhad

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
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$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
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$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
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$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
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$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
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$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
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$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by TA Securities

KUALA LUMPUR: Stocks to watch today include Capital A Bhd, Kerjaya Prospek Group Bhd, TAS Offshore Bhd, Pantech Group Holdings Bhd, LFE Corp Bhd, ABM Fujiya Bhd and MNRB Holdings Bhd.

KUALA LUMPUR: Kerjaya Prospek Group Berhad's wholly-owned subsidiary, Kerjaya Prospek (M) Sdn Bhd, has accepted two letters of award from Pixel Valley Sdn Bhd (PVSB) and Greencove Sdn Bhd (GSB), respectively.

© New Straits Times Press (M) Bhd

KUALA LUMPUR: Kerjaya Prospek Group Bhd via its subdsidiary has secured contracts worth a combined RM34.43mil for works at two separate projects in Selangor and Pulau Pinang respectively.

KUALA LUMPUR: Kerjaya Prospek Group Bhd has initiated legal action against Yong Tai Bhd and its CEO over an alleged unpaid contract sum of RM105.14 million in connection with a construction project in Melaka.

© New Straits Times Press (M) Bhd

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD) -RM292.8m

Project Details: KERJAYA secured a RM292.8 million contract from UEM Sunrise’s subsidiary, Mega Legacy, to build a 57-storey serviced apartment in Kuala Lumpur, including 1,126 units, podium parking, sub-basement, facilities, and security room. Construction starts on 17 Sept 2024, with a 38-month completion timeline.

2024 Performance: This is KERJAYA’s eighth contract of 2024, bringing its total new job wins to RM1.55 billion, nearing the FY24 target of RM1.6 billion.

Order Book: The group’s outstanding order book increased to approximately RM4.7 billion, providing visibility for the next 3-4 years.

Earnings Forecast: The project is expected to contribute 2-3% annually to the Group’s earnings over the construction period, with an estimated RM29.3 million net profit based on historical net margins.

Outlook: Analysts have revised order book replenishment targets upwards to RM1.8 billion and increased earnings forecasts by around 2.2% for FY24-26 due to anticipated additional project wins.

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Kenanga
OUTPERFORM – TP RM2.24

" Bags RM293m UEMS Building Job”

KERJAYA has secured a RM292.8m building contract from a repeat client, UEMS (Not Rated), to build a 57-storey service apartment in Kuala Lumpur, its first external job this year. This brings its YTD job wins to exceed its guidance at RM1.55b, and lifting outstanding order book to RM4.7b. We keep our estimates and TP of RM2.24. OUTPERFORM maintained.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Public
Neutral – TP RM2.00

" Secures RM292.8m Building Job”

Kerjaya Prospek Group (KPGB) was awarded a main building job worth RM292.8m from UEM Sunrise, for a service apartment in Batu, Kuala Lumpur. Assuming low- teen margins, this project is expected to contribute approximately 2-3% per annum on average to the Group’s earnings over the 38-month contract period. This is the Group’s 8th project win in FY24. With this win, cumulative YTD new orders have reached RM1.55bn, surpassing our FY24 job replenishment target of RM1.5bn. As such, we revise our FY24 order book replenishment target upwards by 20% to RM1.8bn, as we anticipate additional wins in the fourth quarter of 2024. As such, we lift our earnings forecast by an average of 2.2% for FY24-26F, due to the adjustments made to our projections. We maintain our Neutral call on KPGB with a higher SOTP-based TP of RM2.00 (previously RM1.96).

Analyst:
Denny Oh
Oh.BoonYeow@publicinvestbank.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by TA
BUY – TP RM2.79

" Wins RM292.8mn Main Building Works”

KERJAYA has secured a RM292.8mn contract from Mega Legacy (M) Sdn Bhd, a subsidiary of UEM Sunrise Bhd. This contract involves the construction and completion of a 57-storey serviced apartment located in Mukim Batu, Kuala Lumpur. The scope of work 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.

Analyst:
Raymond Ng Ing Yeow
raymondng@ta.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by TA
Buy - TP RM2.73

"Stronger 2H Ahead"

We reiterate our Buy call on the stock and TP of RM2.73, based on PER 18x CY25 earnings and 3% ESG premium given our 4-star rating. We continue to like KERJAYA for its:- (i) solid earnings visibility, (ii) consistent and robust replenishment of its order book, and (iii) the potential growth in industrial property construction leveraging the partnership with Samsung.

Analyst:
Raymond Ng Ing Yeow
raymondng@ta.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by RHB
Buy - TP RM2.57

"Earnings On An Upward Trajectory; Stay BUY"

Keep BUY, new MYR2.57 TP from MYR2.45, 36% upside. Kerjaya Prospek’s 1H24 core profit of MYR75m (+22% YoY) makes up 46% and 43% of our and Street full-year projections. We deem results as in line, as more contributions will come from its ongoing projects in the coming quarters, in addition to stronger property development contributions. We forecast a 3-year (FY23-26) earnings CAGR of 14%, backed by steady job flows from Penang and the Klang Valley. KPG’s FY24F dividend yield is also at an attractive c.5% (higher than that of most peers).

Analyst:
Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Public
Neutral - TP RM1.96

"In Line With Expectations"

Kerjaya Prospek Group (KPGB) reported a 17.5% YoY growth in 2QFY24 net profit to RM37.1m, owing to the better performance of its construction and property divisions. Excluding non-core items, KPGB’s estimated core net profit came in at RM38.1m, bringing the 6MFY24 core net profit to RM75.0m. In 1HFY24, Group results were broadly within our and consensus estimates, making up 45.8% and 43.8% of full-year forecasts, respectively. As such, we make no changes to our
earnings forecasts. Maintain Neutral call on KPGB with an unchanged SOP based TP of RM1.96. A second interim dividend of 2.50sen per share was declared, bringing total dividend for the year to 5.00sen per share (6MFY23: 4.0sen per share).

Analyst:
Denny Oh
Oh.BoonYeow@publicinvestbank.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Kenanga
Outperform - TP RM2.24

"Looking to a Strong 2HFY24"

KERJAYA’s 1HFY24 results met expectations with 1HFY24 core profit growing 16% YoY to RM70.6m on higher construction billings and property sales. Its PAT margin slid to 9.6% from 10.1% in 1HFY23 given more progress billings due to a lower margin JV project with Samsung. We keep our forecast, TP of RM2.24 and OUTPEFORM call.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD) $YONGTAI / 7066 (YONG TAI BERHAD)

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Public
Neutral - TP RM1.96

"Material Litigation"

Kerjaya Prospek Group’s (KPGB) unit has filed a lawsuit against Apple 99 Development SB for allegedly failing to pay an outstanding residual contract sum of RM105.1m. We believe the Group has a strong legal basis and merits in its claim. Pending the outcome of the litigation process, this is not expected to have any material impact on the group in the current financial year. However, in the immediate
term, the news flow may trigger a knee-jerk reaction in its share price. Pending the outcome of the litigation process, we maintain our Neutral call with an unchanged SOTP-based TP of RM1.96.

Analyst:
Denny Oh
Oh.BoonYeow@publicinvestbank.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Kenanga
OUTPERFORM– TP RM 2.24

" Bags RM275m E&O Building Job”

KERJAYA has secured a RM275.3m building contract from sister company E&O (Not Rated). This brings its YTD job wins to RM1.25b and outstanding order book to RM5.0b. We keep FY24F forecast but uplift FY25F forecasts by 4% and TP by 4% to RM2.24. OUTPERFORM maintained.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by Public
Neutral – TP RM1.96

" Secures RM275m Building Job from E&O”

Kerjaya Prospek Group (KPGB) was awarded a main building job worth RM275.3m from its interested related-party, Eastern & Oriental (E&O), for a 50-storey service apartment at Pulau Andaman, Penang. This job represents the 7th win in FY24. With this job win, cumulative YTD new wins amounted to RM1.25bn, representing 83.6% of our FY24 target orderbook. Assuming a low teens profit margin, the job is excepted to contribute about 3.7% per annum to the Group’s earning during the contracted period of 38 months. While positive on the contract wins, we keep our forecasts unchanged as this makes up part of our FY24 orderbook replenishment assumption of RM1.5bn. We retain our Neutral call on KPGB with a higher SOTP of RM1.96 (from RM1.72), pegged at a higher PER of 14x to the construction segment, below 16x sector average given its niche in high rise buildings.

Analyst:
Denny Oh
Oh.BoonYeow@publicinvestbank.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by TA
BUY – TP RM2.73

" Bags RM275.3mn Main Building Works”

We maintain our Buy recommendation on the stock with an unchanged target
price of RM2.73, premised on 18x CY25 EPS and 3% ESG premium based on
our 4-star rating.

Analyst:
Raymond Ng Ing Yeow
raymondng@ta.com.my

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)

@ubaidahlifestylez Not really because the key point is around $KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD) which 40 - 50% of new orders will be likely from $KLSE-E&O and $KPPROP / 7077 (KERJAYA PROSPEK PROPERTY BERHAD)

Three Major Catalysts Driving Construction Stocks

1. Large-Scale Infrastructure Projects on the Horizon

The Malaysian government is set to launch a series of large-scale infrastructure projects, such as MRT3 and the Penang Light Rail Transit (LRT). These projects, involving investments totaling billions of ringgit, present significant opportunities for the construction industry.

Leading industry player $GAMUDA / 5398 (GAMUDA BERHAD) has already secured contracts for these projects, ensuring a full order book. Other companies, including $IJM / 3336 (IJM CORPORATION BERHAD), $SUNCON / 5263 (SUNWAY CONSTRUCTION GROUP BERHAD), and $KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD), are actively bidding and are likely to secure substantial contracts in the coming years.

The MRT3 project, one of the most anticipated, is expected to begin awarding civil engineering contracts in 2025. This will create significant opportunities for companies with expertise in railway construction, such as Gamuda. Meanwhile, companies like SUNCON, IJM, and $WCT / 9679 (WCT HOLDINGS BERHAD) are also expected to benefit from elevated track and station construction contracts.

2. Data Center Construction Boom

With the rapid development of the digital economy, Malaysia's data center market is quickly emerging, creating new growth opportunities for construction companies.

SUNCON has excelled in the data center construction sector, securing three projects valued at RM4.1 billion. GAMUDA has also won a RM1.7 billion mega data center construction contract in SIMEPROP's Elmina Business Park. IJM has joined the data center construction race, with its wholly-owned subsidiary securing a RM331.7 million contract to build Block 2 of the Iskandar Puteri Data Center for TM Technology Services Sdn Bhd.

The data center construction boom not only offers opportunities for large construction firms but also for SMEs in the supply chain. Companies providing construction materials, equipment, and services will benefit from the growing demand.

3. Revival of Private Sector Demand

Malaysia’s real estate market, particularly in Johor and Penang, is gradually recovering. This will drive demand for private construction projects, including residential, commercial, and industrial properties. Companies like KERJAYA and SUNCON, which have close ties with real estate developers, are well-positioned to benefit from this trend.

KERJAYA expects 40-50% of its annual new orders to come from its sister companies, E&O and KPPROP. SUNCON will also receive substantial internal orders from its parent company, SUNWAY. These stable order sources will provide the company with steady revenue and profit growth.

$GAMUDA / 5398 (GAMUDA BERHAD) $SUNCON / 5263 (SUNWAY CONSTRUCTION GROUP BERHAD) $KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD) $WCT / 9679 (WCT HOLDINGS BERHAD) $KIMLUN / 5171 (KIMLUN CORPORATION BERHAD)

$KERJAYA / 7161 (KERJAYA PROSPEK GROUP BERHAD)
Research by RHB
Buy – TP RM2.45

“Pockets Of Opportunities To Drive Growth; Stay BUY"

Keep BUY with new MYR2.45 TP (from MYR2.15), 25% upside with c.5% FY24F yield. Kerjaya Prospek has consistently secured new jobs in YTD FY24, despite the absence of new contracts from its industrial segment. Therefore, any upcoming job win from the industrial segment will be a rerating catalyst. The last industrial job KPG secured (with Samsung C&T) was for Texas Instruments Electronics Malaysia in Oct 2022. Aside from KPG’s steady PAT margins of c.10%, we continue to favour the stock for its attractive FY25F dividend yield of c.5% (higher than most of its peers).

Analyst:
Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com