CEO Morning Brief

Kerjaya Prospek Bids for Data Centre, Semicon Factory Projects Worth RM3 Bil

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Publish date: Thu, 30 May 2024, 10:16 AM
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TheEdge CEO Morning Brief
Kerjaya Prospek Bhd chief executive officer Tee Eng Tiong said the company is bidding for the construction of data centres and semiconductor factories and has company partnered Samsung C&T Corp in bidding for two such jobs. (Photo by Low Yen Yeing/The Edge)

KUALA LUMPUR (May 29): Kerjaya Prospek Group Bhd (KL:KERJAYA), which mainly builds homes, is bidding for the construction of data centres and semiconductor factories worth over RM3 billion this year.

The company partnered with Samsung C&T Corp in bidding for two of such jobs, Kerjaya’s chief executive officer Tee Eng Tiong told an earnings briefing. However, Kerjaya’s part in the venture has yet to be determined, he said, noting that the company expects to take up around 30% in the projects.

Further, Kerjaya is also bidding for one civil, structural, and architectural package as a subcontractor independently to expand its portfolio beyond residential properties, Tee said. He declined to disclose the potential value of the contract. The company is also bidding for other projects worth RM1.5 billion.

Kerjaya is joining a bandwagon of Malaysian builders, which include Gamuda Bhd (KL:GAMUDA) and Sunway Construction Group Bhd (KL:SUNCON), seeking highly lucrative contracts to build data centres and other industrial projects.

In 2022, Kerjaya landed a contract worth RM1.45 billion through its joint venture with Samsung C&T to construct a factory for Texas Electronics Malaysia Sdn Bhd in Melaka. The project is slated for completion in March 2025.

Construction of residential projects typically commands a profit margin of around 30% versus 6-8% for non-residential contracts, Tee said. However, non-residential projects tend to be larger in contract value and come with faster billings.

“For example, you need to complete residential projects worth RM300 million within three years, but for data centres, you need to complete them within 18 months and they are worth RM1 billion,” Tee continued, “so, your cash and revenue will be much higher.”

Kerjaya has secured new contracts worth RM979 million so far this year, more than 65% of its own target to replenish RM1.5 billion for FY2024. The company now has outstanding jobs totalling about RM4.5 billion, which will contribute to earnings over the next couple of years.

Earlier on Wednesday, the company reported that its net profit for the first quarter ended March 31, 2024 (1QFY2024) grew 14% to RM33.55 million from RM29.41 million over the same three-month period in 2023. Revenue climbed 13% year-on-year to RM337.14 million from RM297.25 million.

Source: TheEdge - 30 May 2024

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