PETALING JAYA: Kerjaya Prospek Group Bhd could see growth in the quarters to come as the property sector is expected to recover amid better economic prospects.
With new launches in the pipeline for 2021, and encouraging project wins, the outlook for the property development company is seen as positive.
For instance, RHB Research said that a 30% compounded annual growth rate is likely in the next three years for Kerjaya Prospek, which is trading at a valuation of around 10 times price-to-earnings ratio.
“We expect contribution from the property segment to turn meaningful with two new launches planned for this year, ” the brokerage said.
This also followed a RM153.5mil contract its 49%-owned associated company Kerjaya Bina BMK Sdn Bhd had clinched from BBCC Development Sdn Bhd at the end of last week.
The works for this contract is expected to commence on April 15,2021, and it is targeted for completion within the next 30 months.
“The new project award represents 15% of our annual replenishment target which is within expectation, ” RHB Research said.
“Moving forward, we believe its new job replenishment, which continues to show strong momentum, will allow Kerjaya Prospek to enhance its bottom line and further strengthen its recovery post-pandemic, ” it added.
RHB Research maintained its “buy” call on the stock with a raised sum of parts derived target price of RM1.71 from RM1.28 at a 2% dividend yield without a change in its estimates.
TA Research said the latest contract win would increase Kerjaya Prospek’s total outstanding order book to RM3.4bil, which is equivalent to 4.2 times its financial year 2020 revenue.
“Assuming a gross margin of 14%, the project is estimated to generate RM13.8mil of net earnings throughout the construction period, ”
TA maintained its “buy” call on the stock with a target price of RM1.61, based on an unchanged 12 times 2022 calendar year earnings.
Meanwhile, Kenanga Research reiterated its “outperform” rating with a higher sum of parts based target price of RM1.75 after rolling valuation base year forward to the financial year 2022.
“Kerjaya Prospek’s effective stake win of RM75mil from this job is within our financial year 2021 replenishment target of RM1.2bil compared to management’s guidance of more than RM1bil, ” Kenanga said.