Kerjaya Prospek eyes RM1.4b new order book in FY20

This article first appeared in The Edge Financial Daily, on November 27, 2019.
Kerjaya Prospek eyes RM1.4b new order book in FY20
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KUALA LUMPUR: Kerjaya Prospek Group Bhd, which announced a 10.5% drop in net profit for the third quarter ended Sept 30, 2019 (3QFY19), aims to replenish its order book with some RM1.4 billion worth of new jobs in the financial year ending Dec 31, 2020 (FY20).

Group executive chairman Datuk Tee Eng Ho said the target for FY20 will be higher than the RM1.2 billion new job wins it set for FY19 as Kerjaya Prospek is currently bidding more than RM4 billion worth of construction jobs, which include high-rise building jobs and infrastructure work in the Klang Valley and Penang.

“Definitely, it [the order book] will be more than RM1.2 billion, today I would say [the order book] would be between RM1.3 billion to RM1.4 billion [for FY20], [majority coming from] the high-rise building projects and some 10% to 20% from infrastructure works such as bridges and reclamation works, he said at a briefing for media and analysts on the group’s 3QFY19 result yesterday.

Year-to-date, Kerjaya Prospek’s contract wins worth RM1.3 billion exceeded its new job wins of RM1.2 billion, bringing it an outstanding order book to about RM3.2 billion.

Kerjaya Prospek saw its 3QFY19 net profit fell 10.5% to RM33.01 million from RM36.88 million a year ago, due to higher tax expenses arising from under provision of tax.

Meanwhile, revenue for the quarter dropped 2.4% to RM263.33 million from RM269.89 million.

For its nine-month period, net profit slipped 0.46% to RM103.91 million from RM104.39 million last year, against 2.06% lower revenue of RM786.87 million compared with RM803.43 million.

The construction division has remained the group’s main contributor, which currently accounts for 94.8% of the total group’s revenue, while the property development and manufacturing segments contributed to the balance of the top line.

Asked about the prospect for the rest of FY19, Tee said he expected the group to end the year on a flat note.

“This year should be flat because last year we got a lot of contribution from property development division, but this year property development dropped quite a lot, while the construction segment is picking up,” he noted.

Nonetheless, Tee said the group intends to pay higher dividends for the financial year ending Dec 31, 2019 (FY19), compared with 3.5 sen dividend paid for FY18 given its net cash position.

The group has declared an interim dividend of 1.5 sen per share for FY19, which is payable on Jan 6, 2020.

Meanwhile, he has expressed interest in mergers and acquisitions, with an eye on acquiring construction-related companies, citing that mainly due to its complement with Kerjaya Prospek’s business in the construction segment.

The group is in a net cash position of RM190.8 million as at Sept 30, 2019.

Kerjaya Prospek shares closed nine sen or 6.92% higher to RM1.39, bringing its market capitalisation to RM1.71 billion. It saw some 171,600 shares traded.