Kerjaya Prospek Group (KPGB) was appointed to design & build KAIA Heights Phase 2, a residential high rise by UEM Sunrise for RM125.02m. With this job win, KPGB has cumulatively replenished about RM1.1bn, representing 79.2% of our FY23 orderbook replenishment assumption of RM1.4bn. KPGB’s scope of work involves the construction of two blocks of apartment comprising 26 and 25 storeys with a GDV of RM322.8m at Equine Park, Seri Kembangan. No changes made to our earnings estimates as this makes up part of our FY23 orderbook replenishment estimate. The job is expected to contribute c. 2-3% per annum on average to the Group’s earnings during the contracted period of 29 months, assuming mid-teen margins (design & build job reaps higher margin in comparison to normal build job). We maintain our Outperform rating and TP of RM1.55, pegged at 11x PER given KPGB’s smaller market capitalisation.

• About KAIA Heights. The project entails the construction of two blocks of apartment comprising of 26 and 25 storeys, 3 storeys of commercial unit, podium with 6 storeys carpark and common area. Previously in Sept 2021, KPGB was appointed to build KAIA Phase 1 however, at a bigger contract size of RM126.1m – KAIA Heights Phase 1 has a GDV of RM350m, slightly bigger than KAIA Heights Phase 2 of RM322.8m GDV. Construction works will commence in 3QFY23 and targeted to complete by 1QFY26 (within 29 months).

• Construction orderbook grew 12.7%. Accounting this new win, the Group’s outstanding order book in hand climbed 12.7% to RM4.6bn. We estimate the existing orderbook would provide earnings visibility for the next 3-4 years. We expect that this job to contribute c. RM3.1m per annum on average, from FY23- FY26F, assuming mid-teen profit margins. With this job win, KPGB has cumulatively replenished about RM1.1bn, representing 79.2% of our FY23 orderbook replenishment assumption of RM1.4bn. No changes made to our earnings estimates as this makes up part of our FY23 orderbook estimate.

• Our view. While more than 50% of KPGB’s high rise building wins come from its related companies (E&O and Kerjaya Prospek Property), the overall concentration risk after accounting for infrastructure and industrial building works, is well managed at 56:44 (refer illustration 1 in page 2). As-to-date, KPGB has successfully bagged 3 high rise residential job worth RM664.8m or 49.5% out of our RM1.4bn orderbook replenishment assumption for FY23. Moving forward, we are anticipating at least one industrial building job win worth approximately RM200-300m by 4QFY23.

Source: PublicInvest Research - 1 Sept 2023