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 lowteen 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).

• Scope of work. The project involved the construction of 57 storeys of mainbuilding works for a serviced apartment with a total of 1,126 residential units, 8levels of podium parking, one level of sub-basement, a facilities floor and asecurity room. Construction will commence on 17 Sept 2024 and is scheduledfor completion by 4QFY27, within 38 months.

• Revised orderbook replenishment target of RM1.8bn. Following this win, theGroup’s outstanding orderbook increased by 6.6% to RM4.7bn, providingearnings visibility for the next 3-4 years. Our projections show that this projectwould contribute approximately RM5.6m per annum on average from FY24-FY27F, assuming low-teen profit margins. KPGB has already replenishedRM1.55bn YTD, surpassing our earlier FY24 orderbook replenishmentassumption of RM1.5bn. Thus, we revise our FY24 orderbook replenishmenttarget upwards by 20% to RM1.8bn, as additional project wins are expected by4QFY24.

• More external jobs expected in coming quarters. While more than 80% ofKPGB’s job wins come from its related companies (E&O and Kerjaya ProspekProperty), we expect the Group to secure more external projects to reduce theconcentration risk moving forward.

Source: PublicInvest Research - 12 Sept 2024