Kerjaya’s new contract from STP2 neutral to biz

KUALA LUMPUR: Kerjaya Prospeck Group Bhd’s (Kerjaya) new contract from China Communications Construction Company (M) Sdn Bhd (CCC) at Seri Tanjung Pinang (STP) Phase 2B has garnered neutral views.

Kerjaya announced in a filing on Bursa Malaysia that the group’s 70 per centowned subsidiary Future Rock Sdn Bhd (Future Rock) had accepted a Letter of Award on August 1, 2017 from CCC.

CCC appointed Future Rock as a subcontractor for the reclamation works of the project known as “Perimeter Bund for Phase 2B of the STP2 Project” for a total contract sum of RM45.9 million.

“The contract is expected to be completed within 10 months from the date of commencement,” the group said.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) was neutral on the award as Kerjaya’s 70 per cent effective stake in this newly secured contract coupled with existing year to date (YTD) wins amounted to RM412 million.

ThiswasstillwithinKenangaResearch’s targeted replenishment of RM1.6 billion, accounting for 25 per cent of its full-year target.

The research arm noted that management targets a more conservative replenishment of RM0.8 billion for financial year 2017 (FY17).

“Assuming profit before tax (PBT) margins of 14 per cent, the contract is expected to contribute circa RM3.4 million to Kerjaya’s bottomline for the next 10 months,” it said.

Postaward,theresearcharmmaintained its FY17-18E earnings based on FY17-18E replenishment target of RM1.6 billion to RM1.2 billion.

Kenanga Research highlighted that Kerjaya’s outstanding orderbook currently stands at RM2.6 billion, giving them a visibility of circa 2.5 years.

Meanwhile, Kerjaya’s tenderbook stood at RM1.4 billion, which the research arm believed comprise of jobs from their core clients S P Setia Bhd, Eastern & Oriental Bhd and Eco World Development Group Bhd.

Kenanga Research noted that Kerjaya major shareholder Dato’s Tee’s private property arm plans to launch a mixed development project in Old Klang Road with GDV of RM1 billion which the research arm believed would amount up to circa RM300 million to RM400 million of contracts likely to be secured by Kerjaya. — Bernama