• Kerjaya Prospek Group Berhad (Kerjaya) has secured a RM567.7mn contract for Seri Tanjung Pinang Phase 2B and 2C (STP2) reclamation and dredging works which is its largest win for STP2 development thus far.

• Following this contract win, the company has achieved 65% of FY24 internal orderbook replenishment target as well as boosted its outstanding orderbook to RM4.5bn.

• Maintain our BUY call on Kerjaya with SOP derived TP of RM2.03.

Biggest win for STP2

Kerjaya, through its subsidiary Future Rock Sdn. Bhd., has secured a RM567.7mn contract from Tanjung Pinang Development for reclamation and dredging works at Tanjung Tokong, Penang. This fixed lump sum contract of the Seri Tanjung Pinang Phase 2B and 2C development will commence in July 2024 and expected to be completed within 40 months. Note that this is the biggest contract awarded to Kerjaya for the STP2 project (Refer to Table 1).

Achieves 65% of FY24 Orderbook Target

We are positive with the latest contract win as it marks the sixth contract secured in FY24, bringing the cumulative YTD contract value to RM978.7mn (Refer to Table 2). Accordingly, this has raised its outstanding orderbook to RM4.5bn, which reflect the company's earnings for FY24-27. Maintaining the current pace of construction project flows, we believe Kerjaya will achieve its internal orderbook target of RM1.5bn for FY24, having already reached 65% of this target. This will be further bolstered by their pursuit of industrial property projects, with the company currently targeting several projects valued at up to RM1.0bn. We anticipate that Kerjaya's earnings growth will be largely driven by promising opportunities in infrastructure projects from STP2 and the expected launch of the Papyrus @ North Kiara property in the 1H2024.

Maintain a BUY with TP of RM2.03

We maintain a BUY call and SOP-derived TP of RM2.03. We favour Kerjaya mainly due to: 1) solid earnings visibility underpinned by sizeable outstanding orderbook, 2) consistent job flow from related companies (E&O), and 3) captivating growth in the industrial property market through their strategic ventures

Source: BIMB Securities Research - 28 May 2024