Bimb Research Highlights

Author: kltrader   |   Latest post: Mon, 13 Jan 2020, 5:44 PM


Kerjaya Prospek - A good start

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  • Kerjaya Prospek secured its second construction works contract from CK Capital Group worth RM280m for the Edumetro project in Subang Jaya within weeks of securing one in Jan 2019.
  • Based on our net margin assumption of 11.5%, we estimate that this project would deliver RM6.4m and RM16.2m in FY19F and FY20F over its 28-month duration.
  • The contract brings total new jobs secured to RM435m for 2019 so far and makes up 43.5% of our orderbook replenishment assumption.
  • Maintain BUY with RM1.40 TP. The stock’s solid fundamentals are backed by orderbook worth c.RM3.3bn, providing 3 years of earnings visibility, and strong net cash position.

One after another

Kerjaya Prospek secured construction works contract from HCK Capital Group worth RM280m for Edumetro project (previously known as Empire Remix 2) in Subang Jaya. The project comprises of 4 towers on a 3-storey podium and a 4-storey basement. This is the second contract secured from HCK Capital and also for FY19 after securing an RM155m contract for Edusphere, a residential suite in Cyberjaya, back in Jan 2019.

Positive contribution in FY19/FY20 earnings

We expect the new contract would contribute RM6.4m and RM16.2m in FY19 and FY20 respectively based on our net margin assumption of 11.5% and 28-month duration, commencing 1 Apr 2019.

Boosting orderbooks in the beginning of the year

The contract brings total jobs secured in 2019 to RM435m which is 43.5% of our RM1bn orderbook replenishment target. We believe its core expertise in high-rise construction and diversified client base would provide competitive edge to secure new projects for the rest of the year despite the weak property market. To some extent, its net cash position also provides an edge against its peers as developers have better confidence with its working capital.

Reiterate BUY with RM1.40 TP

We reiterate our BUY call with RM1.40 SOP-derived TP. We like the stock for its solid fundamentals which is backed by ample cash reserve and RM3.3bn outstanding orderbook that provides earnings visibility over the next 3 years.

Source: BIMB Securities Research - 13 Feb 2019

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