Clinches RM292.8mn Main Building Works From UEM Sunrise

KERJAYA has secured a RM292.8mn contract from Mega Legacy (M) Sdn Bhd, a subsidiary of UEM Sunrise Bhd. This contract involves the construction and completion of a 57-storey serviced apartment located in Mukim Batu, Kuala Lumpur. The scope of work entails one block of serviced apartments comprising 1,126 units, eight levels of podium parking, one level of subbasement, a facilities floor and a security room.

This project will begin on 17 September 2024 and is slated for completion within 38 months.

Our View

This marks the eighth contract secured by KERJAYA in 2024, bringing its total YTD new job wins to RM1,546.8mn. This achievement represents 96.7% of our initial FY24 new job win assumption of RM1.6bn. As a result, we estimate the group’s current outstanding order book to stand at approximately RM4.7bn, equivalent to 3.2x FY23 revenue.

Assuming a 3-year historical net margin of 10%, this project is expected to contribute a net profit of c.RM29.3mn throughout the construction period.

Forecast

Given the strong order book replenishment in 9MFY24, we have revised our FY24 order book replenishment assumption from RM1.6bn to RM1.8bn. Consequently, our FY24/25/26F earnings estimates have been adjusted higher by 2.5%/2.3%/2.8%, respectively.

Valuation

Following the earnings revision, we raised our target price to RM2.79 from RM2.73, based on 18x CY25 EPS and 3% ESG premium given our 4-star rating. We continue to like KERJAYA for its:- (i) solid earnings visibility, (ii) consistent and robust replenishment of its order book and (iii) the potential growth in industrial property construction leveraging the partnership with Samsung. Maintain a Buy recommendation on the stock.

Source: TA Research - 12 Sept 2024