Kerjaya Prospek Group has secured a RM292.8 million building contract from UEM Sunrise subsidiary, Mega Legacy (M) Sdn Bhd, to construct a 57-storey service apartment in Kuala Lumpur. This contract, which is the first external job for Kerjaya this year, will commence in September 2024 and is scheduled for completion within 38 months. This new project pushes Kerjaya's year-to-date (YTD) contract wins to RM1.55 billion, surpassing the company's full-year FY24 guidance of RM1.6 billion. The total outstanding order book now stands at approximately RM4.7 billion.

The stock is rated OUTPERFORM by Kenanga Stock Broking House with a target price of RM2.24, reflecting a valuation based on a 16x forward price-to-earnings ratio (PER). This valuation is discounted compared to the 20x PER applied to larger contractors such as Gamuda, IJM, and SunCon, due to Kerjaya's focus on the high-rise building sector, which faces oversupply challenges in the office and residential markets. The target price remains unaffected by environmental, social, and governance (ESG) adjustments, given a 3-star ESG rating.

Despite the significant new contract, forecasts remain unchanged. The recent RM275.3 million contract, awarded in August, is set to start construction in January 2025, which will not be recognised in FY24. Therefore, estimates for FY24 are maintained as initially projected.

Kerjaya's appeal lies in its innovative and high-margin formwork construction method, with a net margin of around 10%. The company benefits from a lean and effective management team with a robust execution track record. Additionally, Kerjaya enjoys strong earnings visibility due to a substantial order book and recurring orders from related companies, ensuring a stable revenue stream of at least RM1 billion annually. The stock also offers attractive dividend yields exceeding 5%.