• Kerjaya secured two contracts with a combined value of RM34m from KPPROP

• YTD contract wins totalled RM1.6bn, meeting 89% of our full-year 2024 replenishment assumption. This brings the current outstanding order book to RM4.5bn, providing revenue visibility until 2028

• Reiterate BUY rating with an unchanged SOP-derived TP of RM2.65

Secured RM34m contracts from KPPROP

Kerjaya Prospek (Kerjaya) announced two contract wins with a combined value of RM34.4m from Kerjaya Prospek Property (non-rated). The first contract, valued at RM16m, concerns the piling and pile caps work for a proposed residential development at Batu Kawan with an estimated GDV of RM630m. The second contract, valued at RM18.5m, concerns piling and earthworks for a proposed residential development at Damansara Damai, Petaling Jaya, with an estimated GDV of RM430m. Both contracts are expected to commence work in Nov24 and be completed within 18 months.

Contract wins within our assumption

Inclusive of these new wins, the group’s outstanding order book stands at RM4.5bn, translating to a healthy 3.1x cover of 2023 construction revenue, providing earnings visibility over the next four years. We expect these contracts to contribute a total of RM3.4m PATAMI across 2025-26, assuming a group blended 10% PAT margin. The latest contracts win bring YTD contract win to RM1.6bn, ahead of its RM1.5bn internal target for 2024 and within our RM1.8bn assumption. Looking forward, we expect near-term replenishment prospects to be supported by robust contract flows from E&O and KPPROP, including a c.RM100m contract from KPPROP’s upcoming Shah Alam project, which may be awarded by 1Q25, and ongoing industrial-related tender opportunities (data centre and semiconductor).

Maintain BUY

We make no changes to our earnings forecast as this contract falls under our replenishment assumption. Maintain BUY rating with an unchanged SOP-derived target price of RM2.65. We remain positive on Kerjaya’s earnings prospects, supported by the robust contract flows. Key downside risks include lower-than-expected order book replenishment and project margin deterioration.

Source: Philip Capital Research - 24 Oct 2024