Kerjaya Prospek Group Bhd - Another Related-Party Win in Penang
Tue, 15-Sep-2026 07:31 am
by Research Team • Apex Research

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KERJAYA (7161)

Target Price (RM)

3.75

Recommendation

Buy

·   KERJAYA has secured a contract worth RM37.8m for piling and substructure works at an affordable apartment development in Pulau Andaman, Penang.

·   Assuming a PAT margin of 10%, the contract is expected to contribute c.RM3.78m (or 1.5% of FY26F PAT) over its c.24-month tenure.

·   This latest win lifts KERJAYA's total new contract wins for 2026 to a record c.RM3.3bn, well above the Group's already-raised expectations, and pushes the outstanding order book to a record RM5.9bn.  

·   Hence, we raise our FY26F/FY27F/FY28F earnings forecasts by 1.5%/4.7%/8.7%, respectively.

·   Maintain BUY with a higher TP of RM3.75 (from RM3.58 previously), based on 15.0x PE applied to a higher FY27F EPS of 25.0 sen (from 23.8 sen), alongside a three-star ESG rating.

 

Secured RM37.8m Piling and Substructure Contract. KERJAYA’s wholly-owned subsidiary, Kerjaya Prospek (M) Sdn Bhd, has accepted a letter of award from Persada Mentari Sdn. Bhd. (PMSB), an indirect subsidiary of E&O, for the execution and completion of piling and substructure works for a proposed affordable apartment development at Bandar Tanjung Pinang, Pulau Andaman, Penang, for a fixed lump sum contract price of RM37.82m. The development comprises one block of 38-storey affordable housing apartments totalling 922 units, together with amenity/facility areas, car parks and a Tenaga Nasional Berhad main distribution substation. The contract is scheduled to commence on 1 October 2026 and is targeted for completion within 24 months.

 

Our View. We view this contract win positively, as it provides an additional revenue stream for the Group over the next two years. We assume a PAT margin of approximately 10% for this project, the contract could contribute approximately RM3.78m in PAT over its 24-month tenure, equivalent to roughly 1.5% of our FY26F PAT forecast on a full-contract basis. We would nonetheless note that this piling and substructure package is a related-party job from E&O, reinforcing that a meaningful share of KERJAYA's order book, including this scope-limited early-works package on a larger Penang development, continues to be sourced from related parties even as the Group pursues third-party diversification into data centre and industrial infrastructure work. Execution risk is assessed as low, given the limited scope (piling and substructure only) and KERJAYA's extensive track record executing similar related-party jobs for E&O developments.

 

Outlook. This latest award lifts KERJAYA's total new contract wins for FY26 to a record c.RM3.3bn, comfortably surpassing the Group's original full-year target of RM2.0bn. The outstanding order book has correspondingly risen to a record RM5.9bn, translating to a book-to-bill ratio of approximately 2.6x based on FY25 revenue, underpinning continued strong earnings visibility over the coming years. We continue to expect a mix of related-party replenishment, such as this contract, alongside larger third-party wins in data centre, industrial and other infrastructure-related segments, to underpin KERJAYA's order book growth over the next few years. We believe the combination of a robust RM5.9bn order book, a growing data centre and industrial pipeline, and potential M&E-related synergies from the ES Sunlogy stake position KERJAYA well to sustain earnings growth into FY27 and FY28, even as the residential property market in Malaysia faces periodic headwinds from material costs and financing conditions.

 

Earnings Revision. Following this new contract award, KERJAYA’s FY26 order book replenishment has accounted for 95% of our RM3.5bn assumption. We have revised our FY26 and FY27 order book replenishment assumptions upward to RM3.9bn and RM2.4bn respectively, while maintaining our FY28 assumption of RM2.1bn. Consequently, our earnings forecasts for FY26F/FY27F/FY28F have been revised upward by 1.5%/4.7%/8.7% to RM254.4m/RM314.3m/RM257.8m, respectively.

 

Valuation & Recommendation. We maintain our BUY recommendation on KERJAYA with a higher TP of RM3.75 (from RM3.58), based on a 15.0x PE applied to a higher FY27F EPS of 25.0 sen (from 23.8 sen), alongside a three-star ESG rating.

 

KERJAYA's forward PE has re-rated above its historical mean, reflecting the Group's stronger contract replenishment and earnings growth outlook. While valuation is no longer undemanding, we believe the Group's record RM5.9bn order book provides strong earnings visibility into FY27-FY28. With an estimated total return of 11.8%, we maintain our BUY recommendation.

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