Date of Report

24 October 2024

Broker

UOB Kay Hian

Company Overview

Kerjaya Prospek Group is a construction company that specializes in high-rise building construction. It has a robust market presence, focusing on various segments within the construction industry.

Share Price and Target Price

• Current Share Price: RM2.11
• Target Price: RM2.53
• Upside Potential: +19.9% (Previous Target Price: RM2.23)

Stock Data

• GICS Sector: Industrials
• Bloomberg Ticker: KPG MK
• Shares Issued: 1,261.1 million
• Market Capitalization: RM2,660.8 million (approximately US$611.1 million)
• 3-Month Average Daily Turnover: US$0.5 million
• 52-Week High/Low: RM2.17/RM1.31

Recent Performance

• Price Performance:
  • 1 Month: +11.6%
  • 3 Months: +0.8%
  • 6 Months: +21.7%
  • 1 Year: +60.9%
  • Year-to-Date: +41.3%

Major Shareholders

• Egovision Sdn Bhd: 49.8%
• Amazing Parade Sdn Bhd: 17.9%
• Employees Provident Fund Board: 5.4%

Recent Developments

Contract Wins

Kerjaya Prospek Group has secured two new contracts worth RM34.4 million, bringing the year-to-date replenishment to RM1.6 billion. The new contracts include:

• Pixel Valley Sdn Bhd (PVSB): Involves piling and pile cap works for a proposed development in Batu Kawan, valued at RM16.0 million.
• Greencove Sdn Bhd (GSB): Encompasses site clearance, piling, and structural works for a development in Damansara Damai, valued at RM18.4 million.

These contracts are expected to contribute between RM3.0 million and RM4.0 million over the next 18 months.

Replenishment Performance

KPG has surpassed its RM1.5 billion replenishment target as of September 2024, currently holding an order book of RM4.5 billion, which represents a 3.2x cover ratio. The company is likely to experience further growth with additional contract wins anticipated.

Property Segment Performance

The property segment of KPG is expected to deliver higher earnings in upcoming quarters due to improving take-up rates for key projects. The Papyrus North Kiara project (GDV: RM575 million) has achieved a 50% take-up rate, up from 30% at the end of the second quarter of 2024.

Earnings Outlook

KPG is projected to have a stronger second half of 2024, driven by improving property sales and progress billings. The margins are expected to enhance as KPG completes pre-COVID-19 contracts and initiates work on newer jobs. The company’s earnings forecast for 2024-2026 has been adjusted upwards by 0.9-1.7%.

Dividend Yield

Management is expected to pay out a dividend of 10 sen in 2024, which implies an attractive yield of 4.7% at the current price.

Conclusion

Kerjaya Prospek Group is on a strong growth trajectory, bolstered by new contract wins and a resilient earnings outlook. The company’s focus on property sales and effective management strategies positions it favorably for sustained growth in the coming years.