• Kerjaya Prospek Group Berhad (Kerjaya) obtained two new contracts via related party transactions (RPT), collectively worth RM34.4mn, which represents c.1% of its current orderbook.

• Following the new wins, the YTD order book replenishment has risen to RM1.6bn, resulting in a robust total outstanding orderbook of RM4.5bn that offers earnings visibility through FY28.

• We reiterate our BUY recommendation on Kerjaya with SOP-derived TP of RM2.26 which implies 14.2x FY25F P/E.

Dual Contracts Enhance Earnings Through FY26

Kerjaya has clinched two related party contracts from Kerjaya Property Berhad's subsidiaries, Pixel Valley Sdn. Bhd. and Greencove Sdn. Bhd. valued at RM16.0mn and RM18.5mn respectively which entails site preparation, piling, earthworks and substructure works for a development at Batu Kawan and Damansara Damai. Both projects are scheduled to commence on 5 November 2024 and are expected to be completed within 18 months, reinforcing Kerjaya’s strategic positioning in both Penang and the Klang Valley. This latest win is projected to bolster Kerjaya’s earnings for FY24-FY26.

Latest Wins Ignite Momentum

We view the latest contract wins favourably, marking the 10th project secured in FY24 (Refer Table 1) and pushing YTD job wins to RM1.6bn, edging closer to our FY24 target of RM1.8bn. This also lifts Kerjaya's outstanding orderbook to RM4.5bn (c.3.3x of FY23 revenue). Additionally, the company’s tenderbook (c.RM4.0bn) remains robust of which 70% are related party transactions, with three industrial jobs, including a data center bid worth RM2.0bn.

Maintain a BUY with SOP derived TP of RM2.26

We believe Kerjaya is well-positioned to capitalize on upcoming public infrastructure projects, particularly the Penang Airport expansion and Penang LRT. Additionally, with its strategic focus on the high-rise building segment, the company is set to benefit from sustained demand in the property market. Accordingly, we maintain our BUY call on Kerjaya with a SOP-derived TP of RM2.26, underpinned by: 1) strong earnings visibility from its sizable orderbook, 2) a steady flow of contracts via related party transactions, and 3) significant growth potential in the industrial property market through strategic ventures.

Source: BIMB Securities Research - 24 Oct 2024