Kerjaya Prospek Group (KPGB) was contracted to design & build Versa, a condominium development by Aspen Group, for RM226m. The Group has cumulatively won jobs worth RM1.5bn so far, exceeding our FY23 job replenishment target of RM1.4bn. The job is expected to contribute c. 2-3% per annum on average to the Group’s earnings during the contracted period of 42 months, assuming lowteen margins. With this job win, KPGB has achieved over 70% success rate out of its FY23 tenderbook of RM2bn. While we have anticipated two job wins valued at RM200-400m in 2HFY23, the Group has attained 92% out of our expectation of RM400m as-to-date. Hence, we revise our FY23 orderbook replenishment target upwards by +21% to RM1.7bn, as we expect additional job wins by 4QFY23. As such, we lift our earnings by +2.1% on average in FY23-25F due to the adjustments made to our forecast. We reiterate our Outperform call with a higher SOTP-based TP of RM1.63 (previously RM1.55), pegged at 11x PER, as we rollover our valuation base to CY24.

• About Versa. The project involves the development of two blocks of apartment comprising of 37 floors with a total of 980 residential units, 7-storey podium consisting of carparks, community recreational facilities and shop lots. Construction works will begin in 4QFY23 and completion targeted by 2QFY27 (within 42 months).

• Just 1% shy from RM5bn orderbook mark. The Group’s existing outstanding orderbook added 5% to RM4.97bn after accounting for this job win, providing earnings visibility for the next 3-4 years. Our projections show that this job would contribute about RM4.5m per annum on average, from FY23-FY27F, assuming a low-teen profit margins. KPGB has cumulatively replenished about RM1.5bn YTD, exceeding our earlier FY23 orderbook replenishment assumption of RM1.4bn.

• Our thoughts. Including this job win, KPGB has achieved over 70% success rate out of its FY23 tenderbook of RM2bn as-to-date. While we have anticipated two job wins valued at RM200-400m in 2HFY23, the Group has attained 92% out of our expectation of RM400m. Hence, we revise our FY23 orderbook replenishment target upwards by +21% to RM1.7bn as we expect additional job wins by 4QFY23. Separately, the revenue concentration risk of external and internal jobs after accounting for infrastructure and industrial building works, is fairly managed at 57:43.

Source: PublicInvest Research - 11 Oct 2023