PETALING JAYA: Construction outfit Kerjaya Prospek Group Bhd
remains a preferred pick among construction stocks due to the steady flow of projects, coupled with the potential to clinch an industrial job, with the last one secured in October 2022, says RHB Research.
The builder’s latest project win worth RM201.3mil from related party Kerjaya Prospek Property Bhd is viewed positively by analysts, though they believe the company’s share price as fully valued at this point.
With the latest project win, the company’s order book has increased to RM4.4bil.
RHB Research, which has maintained a “buy” call on the stock but revised the target price to RM3.35 from RM3.45, said it has trimmed the company’s forecast project replenishment for last year by 2% as the actual job replenishment level stood at RM1.8bil compared with the research house’s initial projection of RM2.1bil.
It has also trimmed the earnings forecast for next year and 2027 by 3% and 1%, respectively.
BIMB Research maintained a “hold” call on the stock with an unchanged target price of RM2.77 “as the valuation already reflects near-term upside, trading above historical average”.
It noted that the recent contract win has largely been reflected in the current valuation while strengthening earnings stability rather than driving forecast upgrades.
“Upside hinges on further conversion of external data centre and industrial projects and sustained replenishment above baseline assumptions,” it said.
Kerjaya Prospek has a order book replenishment target of RM2bil for this year.
Kenanga Research said the company and partner Samsung C&T Corp have tenders out for local factory and data centre projects together with additional opportunities including the RM2bil of infrastructure projects for Andaman Island.
“In property development, its 55%-owned Rivanis (a seven-year redevelopment project in Butterworth) will sustain construction and property earnings over the medium term,” it said.
The research house has maintained an “outperform” call on the stock with an unchanged target price of RM3.05.
It said the target price reflects the valuation of the company’s construction business at 18 times this year’s earnings, at a discount to the 22 times ascribed to large contractors such as Gamuda Bhd, IJM Corp Bhd and Sunway Construction Group Bhd reflecting the stock’s mid-capitalisation status.
Meanwhile, Apex Research expects the company to deliver a resilient performance despite macro headwinds supported by its order book, which represents a book-to-bill ratio of 2.4 times.
It remains optimistic of the company’s order replenishment pipeline from related parties Eastern & Oriental Bhd and Kerjaya Prospek Property.
It has maintained a “hold” call and an unchanged target price of RM2.67.
