Kerjaya Prospek Group (KPGB) was awarded a building job worth RM135.4m, ahead of the release of 4QFY22 results, (which is scheduled to be released on Feb 24), from BBCC Development SB, a joint venture company set up by Employees Provident Fund, UDA Holdings and Eco World Development Group. The job scope involves construction of a main building for a proposed development project located at Jalan Hang Tuah / Jalan Pudu, Kuala Lumpur. With this job win, the Group’s outstanding orderbook rose by 3.2% to RM4.3bn. Nonetheless, we are leaving our forecasts unchanged as this makes up part of our FY23 orderbook replenishment assumption of RM1bn. This job represents the first win in FY23. Assuming a low teen profit margin, the job is expected to contribute 2.7% to the Group during the contracted period of 36 months. Our Outperform rating and TP of RM1.69 is affirmed.

• Scope of work. The contract covers design and build of main building for the proposed development project of 31 storey service apartment and podium consist of 7 storey carpark, main lobby and multipurpose hall located at Lot PT 20029, Seksyen 56, Off Jalan Hang Tuah / Jalan Pudu, Kuala Lumpur. Construction shall begin in 1QFY23 and will be completed by 1QFY26 (within 36 months). The job is worth RM135.4m.

• Orderbook rose by 3.2%. The Group’s outstanding order book in hand rose 3.2% to RM4.3bn with the new job win, providing earnings visibility for the next 4-5 years based on FY22’s construction revenue of RM976.6m. Assuming a profit margin of 11% for this project, it will contribute c. RM2.2m in FY23, RM3.0m in FY24, RM6.0m in FY25 and RM3.8m in FY26 in net profit based on certain levels of work completion each year. We make no adjustment to our earnings estimates however, considering this as part of our orderbook replenishment assumption of RM1bn.

Source: PublicInvest Research - 3 Feb 2023