Kerjaya Prospek Group (KPGB) was appointed by Eastern & Oriental (E&O) to develop Arica @ Andaman for RM170.9m. This job marks the Group’s first win of the year, making up 11.4% of our FY24 job replenishment target of RM1.5bn. The Group’s outstanding orderbook added 4% to RM4.5bn. All said, we are leaving our forecasts unchanged as this makes up part of our FY24 orderbook replenishment assumption of RM1.5bn, in line with management’s guidance. Nonetheless, from our estimation, this job would contribute 2-4% per annum on average to the Group’s earnings during the contracted period of 35 months, assuming low-teen margins. We reiterate our Neutral call with an unchanged SOTP-based TP of RM1.52, pegged at 11x PER below 15x sector average given KPGB’s niche in high rise buildings.

• On Arica @ Andaman. The project involves the construction of a 45-storey main building works for the development of a service apartment comprising of one block of a 38-storey service apartment accompanied with 2-storey basement carpark, five-storey elevated carpark, facilities floor and furniture for each typical residential unit situated at Pulau Andaman, Penang. Construction works will begin in 1QFY24 and completion targeted by 4QFY26 (within 35 months).

• Construction orderbook added 4%. The Group’s current outstanding orderbook added 4% to RM4.5bn after accounting for this job win, providing earnings visibility for the next 2-3 years. Our estimates show that this job would contribute about RM4.3m per annum on average, from FY24-FY26F, assuming a low-teen profit margins. No changes made to our earnings estimates as this makes up part of our FY24 orderbook replenishment assumption.

Source: PublicInvest Research - 4 Jan 2024