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 RM1.2bn. Positive on the win as outstanding order-book is lifted to RM3.4bn (3x revenue cover). BUY with TP of RM1.50 anchored to construction PER of 11x. We believe Kerjaya is a good proxy to an economic reopening play given its reliable earnings delivery.

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 RM1.2bn replenishment (management Is targeting RM1.0bn). Post win, outstanding order-book stands at RM3.4bn (3x revenue cover).

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.RM2.6bn worth of construction replenishments from E&O and KPPROP in the next three years.

Source: Rakuten Research - 2 Aug 2021