We are positive on Kerjaya Prospek Group (KPG) outlook. The recently launched The Vue @ Monterez in 3QFY23 with a GDV of RM250m recorded a take up rate of approximately 50% as of November 2023. Meanwhile, the company is planning to launch Papyrus @ North Kiara with a GDV of RM500m in 1QFY24 We maintain our FY23 earnings forecasts at RM139.2m while tweaking our FY24 earnings upwards by 2% to reflect the timing of recognition and introduce our FY25 net earnings forecast at RM181.1m. BUY with target price of RM1.79 based on 13x PER (5-years average) over FY24 EPS with a potential upside of 22.5%.

KPG targets construction job wins of between RM1.2bn-RM1.5bn for FY23 and so far, has secured new projects worth RM1.2bn after stripping off the cancellation of the RM404.4m building job awarded by EcoFirst Consolidated, bringing its total orderbook to RM4.4bn. Meanwhile KPG expects job win of RM1.5bn for FY24.

KPG has signed a framework agreement with Samsung C&T (KL) SB, a wholly-owned subsidiary of Samsung C&T Corporation (Engineering & Construction Group) (Samsung) in 2002. The JV will pursue various types of business opportunities for construction contracts exceeding RM300m. The company will continue to seek for new jobs via this JV focusing on construction of factories in Malaysia.

KPG has 35 ongoing projects notably One49 Residences, VIVO, Bloomsvale, Conlay 491 Astrum Ampang amongst others. The company has an outstanding construction orderbook of RM4.4bn as at 30 November 2023 providing earnings visibility over the next 2-3 years.

We expect KPG to pay dividend of 8.0sen, 8.7sen and 9.1sen for FY23, FY24 and FY25 translating into yields of 5.5%, 5.9% and 6.2% respectively. The company’s balance sheet is strong with net cash of RM204.2m as at 9MFY23. Our BUY recommendation is premised on: (i) innovative construction solutions and efficient cost structure that result in above-average profit margins; (ii) hands on management team with a proven track record of successful executions; (iii) the ability to consistently winning external jobs; and (iv) solid outstanding orderbook of RM4.4bn.

Source: Rakuten Research - 14 Dec 2023

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