PETALING JAYA: Kerjaya Prospek Group Bhd’s latest contract win, which is its fourth for the current financial year, has analysts upbeat about the construction player’s prospects.

       Kenanga Research in a report said the latest contract will boost Kerjaya Prospek’s year-to-date job wins to RM377.9mil against the research house’s financial year 2024 (FY24) assumption of RM1.5bil.

       “The latest job has also boosted its outstanding order book to RM4.7bil.

       “We continue to like Kerjaya Prospek for its innovative and high-margin formwork construction method; its lean and hands-on management team with a strong execution track record; as well as its strong earnings visibility, underpinned by a sizeable outstanding order book and recurring orders from related companies.”

       Kerjaya Prospek announced on Tuesday that its wholly-owned subsidiary, Kerjaya Prospek (M) Sdn Bhd, had accepted a letter of award from Kerjaya Property Sdn Bhd for building works valued at RM111.76mil in Setapak, Kuala Lumpur.

       The group said the contract entailed the building works of a 52-storey building, which comprised 42-storey serviced apartments, one-storey basement, eight-storey elevated car park and one-storey facilities floor.

       The contract duration will be for 40 months.

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       The group said the contract is expected to provide an additional stream of revenue over the next three years.

       Philip Capital estimates this project to contribute circa RM11.2mil in profit after taxation and minority interest across the contract period, assuming a 10% net profit margin.

       “Moving forward, we expect the contract win momentum to remain strong, driven by the higher RM2bil combined launch target by both Eastern & Oriental Bhd (E&O) and Kerjaya Property over the next 12 to 15 months.”

       Philip Capital said it is making no changes to its earnings forecast, as Kerjaya Prospek’s latest contract falls under the research house’s replenishment assumption.

       “We maintain a ‘buy’ rating with an unchanged sum-of-parts-derived target price of RM1.93.

       “We remain optimistic on Kerjaya Prospek’s outlook, driven by its solid order book replenishment track record from reputable clients; potential for high-value production facility projects; and higher project margins compared to the rest of its construction peers.”

       Meanwhile, RHB Research said it expects Kerjaya Prospek to post a net profit of between RM33mil and RM36mil for the fourth quarter of FY23, backed by higher progress billings and improved contribution from the property segment.

       “With a plethora of bright prospects underpinning its job replenishment trends, we believe there is more room for the stock to trade higher than its 13 times FY24 price-to-earnings ratio.”

       RHB Research added that other opportunities may also stem from E&O’s Elmina West development in Shah Alam.

       “Kerjaya Prospek secured a RM25mil job in the third quarter of 2023 to undertake earthworks for the said development in Elmina West.

       “In our view, Kerjaya Prospek may be able to secure more jobs in Elmina West, as the development is important for E&O to mitigate single-location risk.”

       The research house said potential catalysts for Kerjaya Prospek include securing jobs beyond Seri Tanjung Pinang 2 in Penang, especially in Batu Kawan, as well as larger-than-expected wins from the industrial space.

       “Key downside risks are a property market slowdown and prolonged cost material pressures,” it said.