KUALA LUMPUR: Kerjaya Prospek Group Bhd's (KPG) framework agreement with Samsung C&T (KL) Sdn Bhd is a positive step for the company to widen its wings to more sophisticated projects compared to current projects that are mainly related to property.

RHB Research said the framework agreement would enable KPG to leverage the international expertise and strengths of Samsung C&T.

"This is because Samsung C&T brings with it the capabilities in value engineering, advanced construction technologies, and a wide range of expertise to complement the construction of more challenging and complex projects," the firm said.

To recap, KPG's subsidiary Kerjaya Prospek (M) Sdn Bhd has signed a framework agreement with Samsung C&T to embark on a long-term alliance that is expected to accelerate growth for both companies in the construction industry in Malaysia.

Samsung C&T is a wholly-owned subsidiary of Samsung C&T Corp (SCTC), a South Korean construction and engineering company listed on the Korean Stock Exchange.

The research house said the minimum contract value would be considered as the target project by both KPG and Samsung C&T is RM300 million.

Assuming a target project is decided to be pursued by both parties, the nature of the framework agreement will be made known to the tender organiser, the bank-backed research firm said.

"If the target project is awarded to either KPG or Samsung C&T, a joint venture (JV) agreement for the said project will be formed between both parties.

"Overall, the framework agreement will remain in force for five years, which will be automatically renewed on a rolling basis for subsequent periods of one year," it said.

RHB Research has made no changes to its earning estimates on KPG and keeps a Buy on the stock with a new target price of RM1.42 from RM1.45 previously.

"Key downside risks include a slowdown in the property market, higher raw material cost pressures, and lower-than-expected new contract wins," it added.