KUALA LUMPUR (July 23): Kerjaya Prospek Group Bhd shares rose 1.42% at mid-morning today following a target price (TP) upgrade and positive technical outlook for the stock.
At 10.16am, Kerjaya Prospek gained 2 sen to RM1.43 for a market capitalisation of RM1.78 billion.
RHB Research Institute Sdn Bhd has maintained its "Buy" rating on Kerjaya Prospek at RM1.41 with a higher TP of RM1.72 (from RM1.50) and said after recovering from a 99-sen trough (December 2018), Kerjaya Prospek's share price has been flat over the past 12 months.
In a note today, the research house said this is unjustified, as positive operating metrics are not priced in over the past year, earnings grew 16% year-on-year (y-o-y), outstanding construction orderbook increased 20% y-o-y to RM3.5 billion, and year-to-date new orders more than doubled to RM1.1 billion.
"It deserves to trade at 14x P/E (+1SD from 3-year average forward earnings).
"We lift FY19-21 forecasts by 1-6%, as we increase our FY19 new order assumption to RM1.3 billion from RM1 billion. We anticipate at least another contract win within the RM200-250 million range (its average contract size).
"We believe Kerjaya Prospek is maintaining outstanding tenders of RM1.6 billion, with an outstanding orderbook of RM3.5 million.
"Meanwhile, we increase our SOP-derived TP to RM1.72 from RM1.50, now pegging the construction division to 14x (from 12x) FY19F EPS which is +1SD from its 3-year mean.
The research house said this is similar with the group's pure-play, net cash contractor peer, Sunway Construction Group Bhd (TP: RM2.12).