KUALA LUMPUR: Kerjaya Prospek Group Bhd has bright prospects from more contract wins in the coming quarters following a positive third quarter (Q3) FY23 earnings.
Mercury Securities Sdn Bhd said the company's positive advancements in construction activities and contributions from the Vue@Monterez project in the property segment lifted its Q3 earnings.
"The Q3 results met our expectations, with an accomplishment of 68.4 per cent and 66.6 per cent of our full-year revenue and profit forecasts for FY23.
"We revise our revenue and profit forecast upward by 8.6 per cent and 6.6 per cent for FY23 due to the acquisition of new
contracts," Mercury Securities said in a note today.
Kerjaya Prospek boasts a robust net cash reserve amounts to RM204.2 million as of September 30, 2023, and this substantial financial buffer strategically positions the company for potential future project expansion.
The company's order book stands at RM4.7 billion as of September 30, 2023, with RM2.0 billion from related parties and RM900 million from infrastructure projects.
A RM404 million contract with BCM Holding Sdn Bhd (BHSB) was terminated, effectively reducing the orderbook to RM4.3 billion, and Kerjaya Prospek filed a RM20 million damages claim against BHSB.
To recap, Kerjaya Prospek Bhd is seeking RM20 million in termination damages from BHSB, a subsidiary of Ecofirst Consolidated Bhd.
This demand follows BHSB's unexpected decision to cancel the RM404.35 million residential project awarded to Kerjaya Prospek in June this year.
Mercury Securities said Kerjaya Prospek
remains confident in achieving and maintaining their target order book
replenishment of RM1.5 billion for FY24.
Additionally, from August to September 2023, the company has acquired several noteworthy contracts.
The projects include a high-rise building job in Bandar Putra Permai by UEM Sunrise Bhd valued at RM125 million, a concrete structure work for a factory in Melaka from Samsung-KP JV valued at RM142.2 million, a high-rise development contract valued at RM226 million from Aspen Vision Sdn Bhd, and the construction and completion of 69 units of 3-storey semi-detached and terrace houses on Andaman Island, Penang, from E&O Bhd valued at RM104.7 million.
The company won nine construction contracts in 2023, bringing the year-to-date (YTD) contract wins to RM1.6 billion, including the project value with BHSB.
"We maintain a Buy recommendation on Kerjaya Prospek with a revised target price of RM1.66, up from RM1.46, aligning with its FY23 earnings-per-share (EPS) of
11.5 and a price-to-earnings (PE) ratio of 14.4x, which is consistent with the two-year average.
Kerjaya Prospek remains our favourite in the construction sector due to its attractive valuations," Mercury Securities noted.
Key risks are failure to secure new projects, unforeseen project cancellations, delays or postponements, and unanticipated increases in construction costs.
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