Kerjaya Prospek Group (Kerjaya) has been awarded a substantial RM275.3 million building contract by its sister company, E&O, for a 50-storey service apartment project in Bandar Tanjung Pinang, Pulau Andaman, Penang. This new contract, which is set to commence in January 2025 with a 38-month construction period, brings Kerjaya's year-to-date job wins to RM1.25 billion and its outstanding order book to RM5.0 billion.

In light of this latest contract win, analysts have maintained their OUTPERFORM rating on Kerjaya Prospek. The FY24 forecast remains unchanged, but FY25 forecasts have been uplifted by 4%, with the target price adjusted to RM2.24, up from RM2.16. The stock is currently valued at RM1.93, with an estimated upside of approximately 16% from the revised target price. This new target price reflects the positive impact of the latest contract on the company's financial outlook and operational prospects.

Kerjaya's order book includes a significant portion of contracts from related parties, but the company is also targeting additional industrial projects worth over RM1 billion. The tender book currently ranges between RM2.0 billion and RM3.0 billion, with expectations of securing further contracts in the coming months. The adjustment in FY24 job win assumptions has been made to reflect the recent RM275.3 million contract, raising the forecast for FY24 job wins to RM1.6 billion.

Despite the majority of this year's contracts being from related parties, Kerjaya is well-positioned for future growth. The company's focus on high-margin formwork construction methods and its strong management team contribute to its robust earnings visibility. Analysts note that the company's innovative construction techniques, which achieve net margins of approximately 10%, and its substantial order book, provide a solid foundation for sustained performance.

Kerjaya Prospek's attractiveness is further enhanced by its dividend yields of over 5%, offering additional appeal to investors. With a 3-star ESG rating, the target price remains unaffected by ESG considerations.