• Kerjaya Prospek Group Berhad (Kerjaya) announced winning a RM275.3mn building contract at Bandar Tanjung Pinang, Pulau Andaman from Persada Mentari Sdn Bhd.

• Orderbook stood at RM4.4bn, equivalent to 3.0x FY23 revenue, offers earnings visibility through FY28.

• Having met 87% of our FY24 target, we adjusted our orderbook replenishment assumption to RM1.8bn, up by 20% from RM1.5bn.

• Maintain our BUY call on Kerjaya and increased our SOP derived TP to RM2.26 (from RM2.03).

Another Win in Andaman

The RM275.3mn contract awarded by Persada Mentari, an indirect subsidiary of Eastern & Oriental Berhad, set to commence in January 2025 and scheduled for completion over 38 months. This new win will contribute to Kerjaya’s earnings across FY25-28 and further elevate its cumulative YTD contract win to RM1.3bn (refer to Table 2), representing approximately 87% of the company's internal orderbook target for FY24. Consequently, Kerjaya's outstanding orderbook now stands at RM4.4bn (c.3.0x FY23 revenue).

Raising Orderbook Replenishment Assumption

We believe Kerjaya is well-positioned to surpass its internal target, having already achieved 87% of it. Due to a surge in construction project wins, we revised our internal orderbook replenishment target for FY24 upwards to RM1.8bn (from RM1.5bn). This is bolstered by the company's active pursuit of high-value industrial property projects, which could add up to RM1.0bn in new contracts, leveraging on its JV with Samsung C&T. Additional growth prospects are expected from the continued development on Andaman Island and complemented by the increased contribution from its Papyrus @ North Kiara property launch, which has a gross development value (GDV) of RM500mn.

Maintain a BUY with higher TP of RM2.26

We have revised our FY25F-26F earnings forecast for Kerjaya by 5.7%/6.3% respectively and maintain a BUY call with higher SOPderived TP of RM2.26, underpinned by: 1) solid earnings visibility from sizeable outstanding orderbook for FY25F-28F, 2) consistent job flow from related companies (E&O), and 3) captivating growth in the industrial property market through their strategic ventures.

Source: BIMB Securities Research - 20 Aug 2024