Secures RM203.0mn of Concrete Structure Works

KERJAYA has accepted a letter of award for a contract worth RM203.0mn from Samsung-KP JV, a 30:70 joint venture between KERJAYA and Samsung C&T (KL) Sdn Bhd. The project mainly covers the execution and completion of reinforced concrete works for Texas Instruments Electronic Malaysia Sdn Bhd's factory in Melaka.

The project is expected to commence on 29 September 2023 and will take 12 months to complete from the commencement date.

Our View

Based on management’s guidance, the effective order book amount for KERJAYA is around RM142.0mn, as RM61.0mn had already been accounted for in October last year.

This is the seventh construction job secured by KERJAYA in 2023, bringing the total year-to-date contract win to about RM1.3bn. Assuming a gross margin of 14%, the project is estimated to generate RM12.6mn of net earnings throughout the construction period.

Following the job win, KERJAYA’s total outstanding order book now stands at about RM4.5bn, equivalent to 4.0xFY22 revenue.

Forecast

Given that this project secured has exceeded our order book replenishment assumption of RM1.25bn for FY23, we raise our order book replenishment assumption to RM1.6bn. Consequently, we raise our earnings forecasts for FY23/FY24/FY25 by 2.0%/4.5%/4.3%, respectively.

Valuation

After revising the earnings forecasts, we tweaked the target price from RM1.50 to RM1.57 based on unchanged 12xCY24 earnings. Maintain Buy call on KERJAYA.

Source: TA Research - 29 Sept 2023