• Kerjaya announced it accepted a letter of award from Tanjung Pinang Development Sdn. Bhd., an indirect subsidiary company of Eastern & Oriental Berhad (“E&O”), in respect of proposed construction of temporary coastal protection structure for Phase 2B and part of Phase 2C of reclamation for Seri Tanjung Pinang (Phase II) development (“STP2”) project at Tanjung Tokong, Penang

• We are positive on this development as the work scope of the contract is very much within Kerjaya’s specialty and we foresee Kerjaya to deliver the contract in timely manner.

• We make no change to our earnings forecast as YTD job wins are still within our FY20 new projects target of RM1.5bn.

• Maintain BUY with unchanged TP of RM1.30 based on SOP valuations, tagged to 12x PE. Fifth contract win in 2020

Fifth contract win in 2020

Kerjaya bagged its fifth contract for FY2020. This brought YTD contract wins to approximately RM1.3bn. Kerjaya’s outstanding order book now stands at approximately RM3.7bn.

Details of the project

This award is for the execution and completion of a temporary coastal protection structure for Phase 2B and part of Phase 2C of reclamation for STP2 project at Tanjung Tokong, Penang. The construction works will take 40 months to complete.

Jobs within specialty

We are positive on the latest contract win, which also comes from familiar client. Importantly, this contract win is very much within Kerjaya’s speciality scope, i.e infra work – and Kerjaya is conducting another infra work for the same client namely STP 2 infra works (lightings and roadworks) worth RM41.5m.

Financial impact

As YTD job wins are still within our FY20 new projects target of RM1.5bn, we leave our estimates unchanged. The company’s current outstanding order-book of RM3.6b provides 3x revenue cover.

Maintain BUY

We maintain our BUY rating with unchanged TP of RM1.30 based on SOP valuations, implying 12x PE. We remain positive on the company, as Kerjaya’s earnings growth is backed by solid outstanding orderbook of RM5.3b, which will provide earnings visibility for the next 3 years. Maintain BUY

Source: BIMB Securities Research - 15 Sept 2020