Kerjaya Prospek’s order book seen boosting earnings visibility for 3 years

TheEdge Wed, Jan 22, 2020 11:06am - 4 years View Original


Kerjaya Prospek Group Bhd
(Jan 21, RM1.32)
Maintain outperform with an unchanged target price of RM1.50:
Kerjaya Prospek Group Bhd has accepted a letter of award from Patsawan Properties Sdn Bhd — an indirect joint-venture company between Eastern & Oriental Bhd (E&O) and Mitsui Fudosan (Asia) Pte Ltd — to carry out the construction of main building works for a proposed property development project consisting of 491 units of serviced apartments located in Jalan Kia Peng, Kuala Lumpur. The job scope of the proposed 54-storey building works will cover: i) a 10-storey car park with common facilities; and ii) 44 storeys of serviced apartments. The contract, with a total value of RM331.95 million, was set to commence on Monday and completed within 35 months and 11 days from the commencement date.

The latest contract win came hot on the heels of the clinching of a construction job worth RM617 million from Aspen Vision City that was announced just a week ago. This brought its year-to-date contract wins to RM949 million, putting Kerjaya Prospek in a strong position to at least achieve our full-year order book replenishment assumption of RM1.2 billion, which is similar to its 2019 total contract win value of the same. There is no change to our earnings forecasts. Consequently, its outstanding construction order book has risen to RM3.8 billion, which will underpin earnings visibility for the next three to four years.

The deal is regarded to be a related party transaction as Datuk Tee Eng Ho is a director of E&O. He and his family are also substantial shareholders of E&O, holding a 13.9% stake in the company. Tee and his family are also major shareholders of Kerjaya Prospek with a combined interest of 70.8%. — Kenanga Research, Jan 21

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