Kerjaya Prospek Group (Kerjaya) is principally involved in construction of high-end commercial and high-rise residential buildings, property development and manufacturing of lighting and kitchen solutions. The company has an outstanding construction orderbook amounting to RM4.1bn. We expect Kerjaya’s earnings to improve in FY22 following the relaxation of movement restrictions. BUY with target price of RM1.70 based on 13x PER (5-years average) over FY22 EPS or a potential upside of more than 45%.

Kerjaya is targeting construction job wins of about RM1.2bn for FY22. Currently, the company has a tenderbook amounting to RM2bn. On 6 April 2022, Kerjaya has secured a RM265m contract from E&O to build two blocks of apartments, housing a total of 1,020 units at Seri Tanjung Pinang 2, Penang. Together with the recently secured RM710.1m contract for the development of Astrum Ampang, Kerjaya has bagged three contracts in 2022, fast approaching the FY22’s target of RM1.2bn.

Presently, Kerjaya has 34 ongoing projects notably Maya Bay Residences Gamuda Land (T12) SB, VIVO Aspen Vision City SB, Bloomsvale Mixed Commercial Development-KP Property SB, Lucentia Residences BBCC Development SB, Conlay 491 Patsawan Properties SB and Astrum Ampang Nikmat Merpati SB. Kerjaya has an outstanding construction orderbook of RM4.1bn which provides clear earnings visibility over the next 2-3 years.

While the construction segment will remain as the main contributor to Kerjaya in the near future, the property development division is planning to launch 2 projects by 1HFY22 namely Monterez Development and Yakin Land Development. The Monterez Development project has a GDV of RM250m featuring 436 units of apartments in 3 blocks of building and is expected to complete by 2HFY22. Meanwhile, the Yakin Land Development is a 36-storey of 454 units development with an estimated GDV of RM380m.

Kerjaya’s FY20 and FY21 earnings were greatly affected by the Covid19 pandemic. As for now, management guided that the business operations have fully resumed following the relaxation of movement restrictions, hence, we believe earnings to recover to pre-Covid19 level. We are forecasting Kerjaya to register net earnings of RM135.5m and RM161.9m for FY22 and FY23 respectively driven by higher job recognitions. Based on historical payout ratio of 20%, we expect Kerjaya to pay dividend of 2.2sen and 2.6sen for FY22 and FY23, translating into yield of 1.9% and 2.2% respectively. The company’s balance sheet is strong with net cash of RM176.3m as at FY21.

Source: Rakuten Research - 7 Apr 2022