Kerjaya Prospek eyes RM1.2b order book for FY19

KUALA LUMPUR (Nov 28): Construction firm Kerjaya Prospek Group Bhd aims to build up an order book of RM1.2 billion for its financial year ending Dec 31, 2019 (FY19), 20% more than its RM1 billion target this year.

Group executive chairman Datuk Tee Eng Ho said although the market next year is expected to remain challenging, he believes the target is achievable, given the group’s strong balance sheet and workmanship, which he said boost tender success rate.

But the group rarely accepts jobs valued under RM100 million.

“The market will be more challenging next year, [so] we can afford to be selective [on the jobs we take], given our good cash flow. So far every year, we have overachieved [our order book targets],” said Tee at a press and analyst briefing here yesterday.

“Most developers [prefer] main contractors with strong cash flow, especially during difficult [market] conditions,” he said.

According to Tee, the company has net cash of RM180 million in its coffers, and expects to maintain a profit after tax margin of a minimum 10%, at least for up to three years. As of yesterday, Kerjaya Prospek’s outstanding order book stood at RM2.8 billion, providing earnings visibility for the next two and a half years.

Its tender book value is currently over RM1.5 billion. The group is anticipating in several jobs to be awarded next month, which would boost Kerjaya Prospek’s FY18 order book to its RM1 billion target.

The group’s year-to-date (YTD) contract wins amount to RM778.2 million. These included two new jobs announced on Monday to build commercial real estates in Mont’Kiara and along Jalan Cheras here, worth a total RM282.25 million.

Meanwhile, its condominium project in Batu here will begin earthworks and piling in the first quarter of next year on receipt of the necessary approvals and will be launched by end-2019 or early 2020.

The job was secured after its wholly-owned Bazarbayu Sdn Bhd acquired a 90% stake in Yakin Land Sdn Bhd for RM10.8 million last month.

The project — initially comprising two 36-storey blocks — will be revised to a single 60-storey tower, said Tee.

Tee also updated that all residential units of the group’s maiden property development project, Vista Residences @ Genting Highlands, have been sold, but the commercial units — with an aggregate gross development value of RM30 million — may be kept for recurring income.

On Monday, Kerjaya Prospek announced a net profit of RM36.88 million for its third quarter ended Sept 30, 2018, up 7.2% from RM34.41 million in the year-ago quarter, while revenue grew by 17.4% to RM269.89 million, from RM229.94 million previously.

The better earnings were attributed to the group’s core construction segment, which has a substantial order book. This raised its cumulative net profit for the nine-month period by 8.6% to RM104.39 million from RM96.16 million a year ago; revenue rose 14.2% to RM803.43 million from RM703.36 million.

Kerjaya Prospek shares rose one sen to RM1.27 yesterday, giving it a market capitalisation of RM1.57 billion. The stock has retreated about 30% YTD, versus a 46% decline in the Bursa Malaysia Construction Index.

This article first appeared in The Edge Financial Daily, on Nov 28, 2018.

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