KUALA LUMPUR: Kerjaya Prospek Group Bhd
's (KPG) latest job win is just a sign of more to come, say analysts, as the company's job replenishment prospects look bright.
"With a plethora of bright prospects underpinning its job replenishment trends, we believe there is more room for the stock to trade higher than its 13x FY24F price-earnings," said RHB Research in a bullish report on the construction and engineering stock.
"Putting aside the Seri Tanjung Pinang Phase 2 (STP2) development in Penang which may guarantee the flow of jobs to KPG – we view that there are other opportunities for the group from various angles."
The research firm maintained its "buy" call and raised its target price on KPG to RM1.93 after ascribing a higher price-earnings of 14x, up from 12.5x, for the construction arm to reflect the level KPG was trading at during the mid-2017 construction upcycle.
Having secured about RM1.4bil worth of jobs in Batu Kawan from Aspen Group Holdings Ltd, RHB believes KPG stands a chance of bidding for industrial building jobs under the group.
Via its subsidiary, Aspen Vision Properties Sdn Bhd, the group has a stake in Global Vision Logistics, the developer of the 71-acre Shah Alam International Logistics Hub.
Other job opportunities could come from Eastern & Oriental Bhd's Elmina West development, which has an estimated gross development value of RM1.5bil.
"Recall that KPG has secured a RM25mil job in 3Q23 to undertake earthworks for the said development in Elmina West.
"In our view, KPG may be able to secure more jobs in Elmina West as the development is important for EAST to mitigate single-location risk," said RHB.
In a bourse filing yesterday, KPG announced its fourth contract award of FY24 worth RM112mil, for a proposed development in Setapak, which brings its year-to-date job wins to RM378mil.
This brings the company to 25% of its RM1.5bil job replenishment target and boosts total construction orderbook to RM4.7bil, which would give it earnings visibility of four years.
For 4QFY23, RHB expects KPG to post a net profit of RM33-36mil, which is a 23-35% increase year-on-year, on the back of higher progress billings and improved contribution from the property segment.
