Kerjaya Prospek Group Bhd (TP: RM2.79), A Strong Investment Opportunity Amid Strategic Growth and New Developments

Kerjaya Prospek Group Bhd (BURSA: KERJAYA) is stepping up its property development game with a major new project in Seberang Perai, Penang. Through a joint venture (JV) with Aspen Vision Development (AVD), KERJAYA is set to develop 36 acres of prime land in Penang, aiming to create a large-scale mixed-use development that will include affordable housing, residential and serviced apartments, and retail spaces.

The land deal is secured under a Heads of Agreement with Malaysia’s Railway Assets Corporation (RAC), and KERJAYA’s subsidiary Futuprop Sdn Bhd holds a 55% stake in the JV. This project represents a huge opportunity for KERJAYA to expand its property footprint in a high-demand region, especially as Penang prepares for significant infrastructure growth, including the upcoming Light Rail Transit (LRT) and the Juru-Sungai Dua Elevated Highway. These developments are expected to make the area even more accessible and boost demand for new properties.

KERJAYA has negotiated a competitive land price for the project, at about 10.4% of the projected Gross Development Value (GDV) of RM1.5 billion. This is well below the usual benchmark, suggesting the potential for strong returns. The price per square foot (psf) came in just slightly above recent deals in the area, a good value considering the land’s proximity to key transport hubs and future infrastructure.

KERJAYA’s cash position of RM251.4 million as of mid-2024 gives it plenty of room to fund this project without stretching its finances. This financial strength is a big plus, especially when you factor in the potential for additional projects in the future, making it well-prepared to capitalise on any growth opportunities.

KERJAYA has been gradually increasing its focus on property development, with recent successful projects in Genting Highlands, Monterez, and North Kiara. The company’s property division has already shown growth, contributing 6.3% to the group’s net profit in the first half of FY2024, up from 3.0% last year. With this new Penang project likely to start generating earnings from FY26, the property side of the business could be a meaningful profit driver in the near future.

With a Buy rating and a target price of RM2.79 given by TA Securities, KERJAYA looks attractive for investors. This valuation factors in an 18x CY25 earnings multiple plus a 3% ESG premium, recognising its strong corporate practices. The company’s focus on securing big projects and expanding its order book adds visibility to its future earnings, while its partnerships and expanding property pipeline put it in a good position for growth.

KERJAYA’s latest joint venture in Penang gives it a foothold in one of Malaysia’s key growth regions, with big infrastructure projects on the horizon. This strategic land acquisition, combined with a strong financial base and a well-diversified portfolio, makes KERJAYA an interesting stock to watch for investors looking for exposure to property and construction. With continued earnings visibility and promising expansion plans, KERJAYA Prospek Group Berhad could be a solid investment for the long term.