KERJAYA: Solid Pipeline Underpins Construction Firm’s Growth, BUY Rating Maintained

PhillipCapital has reiterated its BUY rating on the construction and property development firm, maintaining an unchanged target price of RM2.70. This assessment follows a recent briefing that reassured analysts of the company’s robust earnings prospects and a strong project pipeline. The current last traded price stands at RM2.16, implying a potential total return of 25.0% based on the target price.

Property Development Pipeline Fuels Future Growth

The company’s property development arm is identified as a key driver of future earnings momentum, particularly in the second half of 2025. This growth is supported by a substantial RM3.9 billion order book. Noteworthy ongoing projects include The Vue and Papyrus, which have achieved impressive take-up rates of 92% and 60% respectively and are both slated for completion by the first half of 2026.

Looking further ahead, the pipeline is set to be strengthened by significant planned launches. These include the Tanjung Bungah project with Aspen (RM800 million Gross Development Value, GDV) in 2026 and the Jalan Puchong project (RM800 million GDV) in 2027. Additionally, the Rivanis project (RM1.5 billion GDV) is awaiting regulatory approval, with a target to launch within 12 months once approval is secured. The firm’s healthy net cash buffer of RM327.6 million provides ample support for active land acquisition and the exploration of industrial park development opportunities to further enhance its property portfolio.

Robust Order Book Supports Replenishment Targets

As of June 2025, the outstanding order book stood at RM3.9 billion, having already secured RM870 million in new wins year-to-date. This achievement represents 54% of the firm’s full-year order replenishment target of RM1.6 billion, demonstrating strong progress.

Replenishment prospects are well-buttressed by upcoming project launches from its subsidiary KPPROP, including projects in Shah Alam (RM250 million GDV), Damansara Damai (RM430 million GDV), and Batu Kawan (RM630 million GDV). Furthermore, a RM1 billion GDV project, E&O’s Plot 16E, contributes significantly to the pipeline. The company also holds an external tender book valued at RM1.5-2 billion, predominantly comprising residential projects, alongside two ongoing data centre (DC) tenders in partnership with Samsung C&T, estimated at RM2 billion.

Outlook and Key Risks

PhillipCapital’s positive outlook is largely underpinned by the expectation of steady contract flows from its key partners, E&O and KPPROP. However, the investment bank highlights two primary risks to its BUY recommendation: potential increases in building material prices and a lower-than-expected rate of order book replenishment. Despite these risks, the firm’s strong fundamentals and project visibility warrant the maintained positive stance.