Kerjaya Prospek Group Bhd - Second Award from Majestic Gen
Mon, 15-Dec-2025 09:07 am
by Research Team • Apex Research

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KERJAYA (7161)

Target Price (RM)

2.67

Recommendation

Hold

  • KERJAYA has secured a construction contract worth RM225.0m for the construction of a 50-storey serviced apartment tower with commercial components in Johor Bahru, Johor.

  • Assuming a PBT margin of 11%, the contract is expected to contribute c.RM24.8m (or 8.8% of FY26F PBT) over FY26F-FY28F.

  • We have raised our FY25 order book replenishment assumption from RM1.2bn to RM1.8bn following the latest contract win. In addition, we have upgraded our margin assumptions after stronger-than-expected 3QFY25 results. Collectively, these revisions lift our FY25F-FY27F earnings forecasts by 9.8%/14.2%/16.0%.

  • Maintain HOLD recommendation with an increased TP of RM2.67 (from RM2.34), based on 15.0x P/E multiple applied to its FY26F EPS of 17.8 sen, along with a three-star ESG rating.

     

Secures Construction Contract Worth RM225.0m. On 12 Dec 2025, KERJAYA’s wholly-owned subsidiary, Kerjaya Prospek (M) Sdn Bhd, secured a RM225.0m building works contract from Majestic Gen Sdn Bhd for the development of a serviced apartment tower in Johor Bahru, Johor. The project, which involves the construction of a 50-storey serviced apartment block with integrated commercial space and two levels of recreational facilities, is scheduled to commence on 16 Jan 2026 and will span a construction period of 38 months. This marks the Group’s second project awarded by Majestic Gen Sdn Bhd, following an earlier RM162.0m contract secured in May for a 47-storey transit-oriented serviced apartment development.

 

Our View. We view the latest contract win positively, as it marks the Group’s 12th secured project for FY25, increasing its total order book replenishment for the year to RM1.8bn, allowing the Group to underpin earnings through FY28. Assuming an 11% PBT margin, the RM225.0m job is expected to contribute c.RM24.8m in PBT over the 38-month construction period starting Jan 2026 (8.8% of our FY26F PBT). Execution risks appear manageable given KERJAYA’s strong and consistent track record in high-rise construction. With this award, KERJAYA’s unbilled order book rises to c.RM4.3bn, equivalent to 2.3x FY24 revenue, ensuring solid earnings visibility over the next three years.

 

Outlook. With proactive measures in place to mitigate external headwinds such as labour shortages and rising material costs, we anticipate the Group to deliver resilient performance, underpinned by its sizable construction order book of RM4.3bn. We are optimistic on the Group’s ability to secure contracts moving forwards with its recent series of awards. Assuming a combined GDV of RM3.0bn from yearly launches by its related parties, Eastern & Oriental Bhd and Kerjaya Prospek Property Bhd, and applying a 50% construction-cost-to-GDV ratio, the Group stands to secure approximately RM1.5bn in annual order book replenishment from related-party projects.

 

Earnings Revision. We have raised our FY25 order book replenishment assumption from RM1.2bn to RM1.8bn following the latest contract win. In addition, we have upgraded our margin assumptions after stronger-than-expected 3QFY25 results. Collectively, these revisions lift our FY25F-FY27F earnings forecasts by 9.8%/14.2%/16.0%.

 

Valuation & Recommendation. We maintain our HOLD recommendation on KERJAYA with an increased TP of RM2.67 (from RM2.34)based on 15.0x FY26F EPS of 17.8 sen, along with a three-star ESG rating.

 

Risks. Rising material costs, labour shortages, and high-rise office oversupply in the property sector.

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