Kerjaya has won a RM139m job from Damansara Peak (an E&O JV) to build 54 units of villas at Damansara Heights, Kuala Lumpur. Contract win is within our FY21E replenishment target of RM1.2b. Positive on the win as outstanding order-book is lifted to RM3.4b (3x revenue cover). Reiterate OP with unchanged SoP-TP of RM1.50 anchored to construction PER of 11x.

Fourth job of the year. Kerjaya has won a RM139m job from Damansara Peak (A 51:49 JV between E&O and Mitsui Fudosan) to build 54 units of villas at Jalan Teruntung, Damansara Heights, Kuala Lumpur. The construction of this development known as “The Peak” (GDV of RM348m) will span 36 months starting Sep 2021. This is Kerjaya’s fourth contract replenishment YTD in which three of them are related party transactions (RPT).

YTD job wins at RM523.5m – in line with our RM1.2b replenishment (management Is targeting RM1.0b). Post win, outstanding order-book stands at RM3.4b (3x revenue cover).

Strong pipeline of RPT jobs from E&O and KPPROP. In the immediate future, we foresee a higher number of jobs coming from Datuk Tee’s* two other listed companies (E&O and KPPROP) instead of external parties. We view this positively given Datuk Tee’s ability to drive property sales translating to lower counterparty receivable risks especially during these precarious times. Based on our estimates, we foresee c.RM2.6b worth of construction replenishments from E&O and KPPROP in the next three years (refer table overleaf).

*Datuk Tee Eng Ho is the major shareholder of KERJAYA, E&O and KPPROP

Maintain FY21E/FY22E earnings at RM94m/RM159m backed by replenishment of RM1.2b/RM1.5b.

Keep OP on unchanged TP of RM1.50 anchored by a construction PER of 11x. We believe Kerjaya is a good proxy to an economic re- opening play given its reliable earnings delivery.

Risk to our call includes: lower-than-expected job wins, delay in construction progress and lower construction margins.

Source: Kenanga Research - 2 Aug 2021