Stock With Momentum: Kerjaya Prospek Group

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This article first appeared in The Edge Financial Daily, on March 22, 2016.


Kerjaya Prospek Group Bhd (-ve)

SHARES of Kerjaya Prospek Group Bhd (fundamental: 2.6/3, valuation: 1.5/3) closed 2.34% higher at RM1.75, after 299,100 shares changed hands yesterday. In comparison, it’s 200-days average volume is only about 57,404.

In a filing to Bursa Malaysia yesterday, Kerjaya, previously Fututech Bhd, announced that its 70%-owned subsidiary, Future Rocks Sdn Bhd (FRSB), has accepted a letter of award (LoA) for dredging works worth RM181.31 million from China Communications Construction Company (M) Sdn Bhd (CCCC), dated 17 March 2016.

The job is for a project known as “Reclamation for Seri Tanjung Pinang (Phase II) Development (STP 2) Penang”, and the LoA appoints FRSB as the subcontractor to undertake the entire channel dredging works under Package 1 of the project.

The project, where CCCC is the principal contractor for Seri Tanjung Pinang Development Sdn Bhd, will commence work soon and is expected to be completed by March 2018.

On 25 February, Kerjaya Prospek released its results for the fourth quarter report ended December 31, 2015 (4QFY15), which saw its net profit grew by 23.37% to RM4.76 million from RM3.85 million in the same quarter a year ago. The revenue for the quarter also increased by 22.05% to RM18.6 million from RM15.2 million in 4QFY14.

The improved performance was mainly attributed to the property development segment, which it ventured into in 2014. With the property development segment contributing its revenue to the group, it now has a broader revenue base in addition to its construction and manufacturing segments.

In its notes to Bursa, it said “notwithstanding the group's objective to expand its core business in construction, it will continue to explore property development and manufacturing-based opportunities as part of its integrated business objective and strategy.”

At the current price, the stock is trading at a trailing P/E ratio of 13.7 times and is 2.04 times its book value.