Kerjaya Prospek Group Bhd - First Venture into Hospital Construction
Mon, 06-Apr-2026 09:45 am
by Tan Wai Wern • Apex Research

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KERJAYA (7161)

Target Price (RM)

3.10

Recommendation

Buy

  • KERJAYA clinched a RM98.8m building works contract for the construction of a hospital complex in Seremban 2.

  • We expect KERJAYA to remain resilient moving forward, underpinned by its sizeable RM4.3bn outstanding order book and RM2.0bn tender pipeline.

  • Upgrade to BUY (from HOLD) with an increased TP of RM3.10 (from RM2.71), based on 15.0x PE applied to rolled forward FY27F EPS of 20.6 sen, alongside a three-star ESG rating.

 

Secured Private Hospital Construction Project Worth RM98.8m. KERJAYA has been awarded a RM98.8m building works contract for a private hospital in Seremban 2 by a new client, Sena Letrik (M) Sdn Bhd. The project comprises the construction of an 8-storey hospital complex, including the main building, mechanical and electrical (M&E) installations, as well as external works. Construction is set to commence immediately, with completion targeted within 18 months.

 

On the Client. Founded in 1984, Sena Letrik (M) Sdn Bhd is an established M&E contractor registered with the Construction Industry and Development Board (CIDB), Suruhanjaya Tenaga (ST) and Kementerian Kewangan Malaysia (KKM). Backed by more than 35 years of experience, the group has delivered a diverse range of projects, including airfield ground lighting (AGL) systems, traffic light systems and healthcare infrastructure. Under the leadership of Group Managing Director Tan Sri Dato’ (Dr) Tan Boon Hock, Sena Letrik has built a strong track record in AGL projects across Malaysia, with notable works at airports such as Penang, Subang and Johor.

 

Our View. We view this latest award positively, asit marks KERJAYA’s third award for FY26 and further enhances earnings visibility moving forward. Based on an estimated 12% PBT margin, the project is expected to contribute c.RM11.9m in PBT over its 18-month duration, equivalent to 3.2% of our FY26 forecast. As this represents the Group’s initial foray into the healthcare segment, we have adopted a conservative margin assumption relative to its core residential projects, which typically deliver an estimated 13% PBT margin. Nonetheless, we see limited execution risk given the Group’s proven track record across a broad range of developments, including industrial, infrastructure and land reclamation projects, in addition to its core residential expertise. This award lifted YTD contract wins to RM802.3m and strengthens the Group’s outstanding order book to a robust RM4.3bn.

 

Outlook. We expect KERJAYA to deliver resilient performance despite ongoing macro headwinds, underpinned by its sizeable RM4.3bn outstanding order book, which implies a book-to-bill ratio of 1.8x. Looking ahead, replenishment remains supported by a visible pipeline from related parties such as KPPB and E&O. Assuming combined annual GDV launches of RM3.0bn and a 50% construction-to-GDV conversion, the Group could secure RM1.5bn in related-party contracts, providing a solid baseline for order book growth. In addition, the Group is targeting RM2.0bn in new contract wins for FY26, with a greater focus on third-party projects to rebalance its mix to 35% external and 65% internal jobs. This will be complemented by increased participation in infrastructure-related segments, including industrial, data centres and commercial projects. Overall, the existing RM4.3bn order book, together with an estimated RM2.0bn tender pipeline, supports strong earnings visibility ahead.

 

Earnings Revision. No change to earnings as this award falls within our orderbook replenishment assumption of RM1.8bn for FY26.

 

Valuation & Recommendation. Following the recent share price weakness, we upgrade the stock to a BUY rating (from HOLD) with an increased TP of RM3.10 (from RM2.71), based on a 15.0x PE applied to our rolled forward FY27F EPS of 20.6 sen, alongside a three-star ESG rating.

 

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

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