PETALING JAYA: Kerjaya Prospek Group Bhd
is expected to deliver stronger third-quarter earnings sequentially as project execution enters the steeper end of the S-curve, supporting faster progress billings.
The group’s revenue in the first half of 2026 remained below the quarterly revenue run rate of RM560mil to RM570mil in 2025, as most job wins are still in the early stages of execution.
Phillip Capital Research, however, said earnings before interest, taxes, depreciation and amortisation margin may soften slightly on higher recognition of project costs.
Nevertheless, the impact on core net profit margin should be partly cushioned by 1.5-month contributions commencing from ES Sunlogy.
Kerjaya Prospek has a 31% stake in ES Sunlogy.
Looking ahead to 2027, Phillip Capital Research said Kerjaya Prospek’s earnings should benefit from the continued ramp-up in project execution across its order book.
The research house also noted that Kerjaya Prospek has secured a record RM3.4bil of new jobs year-to-date (y-t-d).
“With three months remaining, we see it on track to meet our RM4bil replenishment target.
“Visibility on further wins remains strong, with related parties Eastern & Oriental Bhd (E&O) and Kerjaya Prospek Property Bhd potentially providing at least RM1bil of jobs annually.”
E&O’s Andaman Island is particularly significant, with only about 7% of its RM60bil gross development value launched so far.
Phillip Capital Research said Kerjaya Prospek is becoming less reliant on related-party projects, with external jobs accounting for 61% of y-t-d new wins.
In 2024, the share was lower at 19%.
Kerjaya Prospek has added eight new clients this year, including Terasmaju, Sena Letrik, IJM Corp Bhd, BRDB Developments Sdn Bhd, Sunway Majestic, Jati Tinggi Group Bhd and two data centre (DC)-related clients
The research house also pointed out that the maiden direct DC contract further highlighted Kerjaya Prospek’s ability to secure projects outside its traditional segments.
Kerjaya Prospek first gained a foothold in the DC sector in July 2026 with a RM53mil subcontract covering civil, structural and basic low-voltage mechanical and electrical works in the Klang Valley.
The RM858mil direct award in September 2026 marked a sizeable expansion in Kerjaya Prospek’s DC order book and could serve as a stepping stone towards a larger role in the sector, Phillip Capital Research said.
“Based on our channel checks, the contract covers 60 megawatt (MW) of information technology capacity, translating to RM14mil per MW.
“We gather that the group has set up a dedicated team focused on DC projects, separate from its residential and main building teams, signalling its intention to pursue further DC opportunities.”
The eight-month tenure of the recent DC contract has reduced the 2026 burn rate from 2.7 to 2.2 years.
Historically, the past three-year (2023-25) contract secured an average burn rate of 2.6 to three years. The faster burn rate suggested faster revenue recognition timing on large contracts.
This comes at the expense of margins, however, with management guiding to 5% to 6% project net margin, below Kerjaya Prospek’s blended group margin of 11%, which traditionally focused on residential and commercial jobs.
Looking forward, Phillip Capital Research maintained its “buy” call on Kerjaya Prospek with a higher target price of RM4.80 per share.
Despite an over-30% y-t-d share price performance, the research house said Kerjaya Prospek still trades at 13 times forward price-to-earnings ratio, below the construction sector’s average of 14 times.
“We believe the recent re-rating is supported by its client diversification and successful entry into the DC segment.
“We remain positive on Kerjaya Prospek’s earnings outlook, underpinned by strong contract wins and a sizeable RM5.9bil order book, which provides revenue visibility through 2029,” said Phillip Capital Research in a note.
