Kerjaya Prospek Group (KERJAYA: 7161) is poised for continued growth. The company has built a solid reputation for delivering high-quality projects on time and within budget thus rendering them dependable to handle complex and high-stakes projects. Year to date, KERJAYA has secured contracts totalling RM978.7m. We maintain our FY24 earnings forecasts while raising our FY25 earnings projection by 3% to reflect the timing of earnings recognition. BUY with a higher TP of RM2.25 (from RM2.10) as we rolled over our valuation to FY25 based on PER of 15x.

At present, KERJAYA has 24 ongoing projects, notably One49 Residences, VIVO, Bloomsvale, Conlay 491, and Astrum Ampang. With close to RM1bn in new projects secured over the past few months, KERJAYA has an outstanding order book of RM4.1bn, providing earnings visibility over the next 2-3 years. We expect KERJAYA to target job wins of about RM1.5bn for FY24. Additionally, KERJAYA is also exploring opportunities in infrastructure work in Andaman Island, Penang, amounting to RM2bn.

KERJAYA's efficient project management practices ensure that projects are completed on time and within budget. The company's ability to manage resources effectively and mitigate risks contributes to the consistency of its earnings margins throughout the years.

For property development division, KERJAYA has two projects, namely The Vue @ Monterez (RM300m GDV) and Papyrus @ North Kiara (RM500m GDV). The Vue @ Monterez has been well received and has a take-up rate of approximately 70% as of 31 March 2024, while Papyrus @ North Kiara was soft launched on 16 March 2024.

Our recommendation to BUY KERJAYA is driven by: (i) the company's innovative construction solutions and efficient cost structure, leading to above-average profit margins; (ii) the hands- on management team with a history of successful project execution; (iii) KERJAYA's consistent ability to secure external contracts; (iv) a strong outstanding order book of RM4.1bn; and (v) decent dividend yields exceeding 4%.

Source: Rakuten Research - 26 Jun 2024

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