KUALA LUMPUR: RHB Research is maintaining its "Buy" rating on Kerjaya Prospek Group Bhd following its joint venture (JV) with Aspen Vision Development Sdn Bhd for a mixed development project on 36 acres in Perai, Penang.
The research firm has raised its target price for Kerjaya Prospek's stock to RM2.67 from RM2.57.
RHB Research is positive on Kerjaya Prospek due to its strong job flow pipeline in Penang and the Klang Valley, which supports the group's forecasted 14 per cent compounded annual growth rate (CAGR) for earnings over the fiscal years 2023-2026 (FY25-26F).
The firm has raised its FY25-26F earnings projections by 3.0 per cent and 5.0 per cent, respectively, to reflect anticipated contributions from the new project, which assumes a 15 per cent profit after tax (PAT) margin.
No changes were made to the FY24 earnings forecast, as construction activities are expected to commence towards the end of the year.
Kerjaya Prospek announced via a bourse filing that its wholly owned subsidiary, Futuprop Sdn Bhd, and Aspen Vision will establish a 55:45 special purpose vehicle (SPV) named Rivanis Ventures Sdn Bhd to carry out the development.
This project, set to span seven years from late 2024, will include the construction of 338 affordable housing units, 1,680 residential units, serviced apartments, retail outlets, and offices.
The JV will acquire the development land from Railway Asset Corp, a Ministry of Transport subsidiary, for RM156.49 million, comprising RM54.1 million in cash and the delivery of all 338 affordable housing units, valued at RM102.39 million.
RHB Research views this expansion of Kerjaya Prospek's property division, especially its Klang Valley projects with a total gross development value (GDV) of around RM800 million, as a positive move.
"Based on our estimates, which assume that the average selling price of the residential units and serviced residences is RM500,000 (in line with prices of surrounding properties), the total GDV of this development will be around RM1.7 billion. The JV also has a first right of refusal to develop the adjacent plot of land spanning about 19.7 acres for the next phase (which we exclude from our projections at this juncture)," it said.