RHB Research has maintained its BUY recommendation on Kerjaya Prospek Group (KPG) however raised its target price to RM3.87 from RM3.41, following the construction group’s record RM858 million data centre contract in Johor.
The new target price implies 34% upside, alongside an estimated FY27 dividend yield of about 5%.
RHB said Kerjaya Prospek secured the RM858 million contract from a data centre developer for the execution and completion of mechanical, electrical and plumbing (MEP) fit-out works at a data centre in Iskandar Puteri, Johor.
The fixed lump-sum contract is expected to commence in 3Q26 and be completed within eight months from the commencement date.
At RM858 million, the contract is Kerjaya Prospek’s largest single project secured to date, surpassing its previous major RM710 million Astrum Ampang contract awarded in February 2022.
The latest contract represents approximately 15% of Kerjaya Prospek’s outstanding order book of RM5.9 billion, providing the group with greater earnings visibility.
As this marks Kerjaya Prospek’s first data centre project, RHB expects the contract to generate net margins of between 5% and 7%.
The research house also did not rule out the possibility of ES Sunlogy, in which Kerjaya Prospek holds a 31% stake, becoming a potential subcontractor for the project’s mechanical and engineering works.
The data centre award has lifted Kerjaya Prospek’s year-to-date FY26 contract wins to RM3.2 billion, already exceeding RHB’s initial full-year job replenishment target of RM2.8 billion.
Consequently, the research house raised its FY26 job replenishment assumption to RM3.5 billion.
RHB believes another RM200 million to RM300 million of contract wins for the remainder of FY26 is plausible.
Potential near-term opportunities include Aspen Group’s Mezon@Park Enclave in Batu Kawan, which RHB estimates could be worth RM200 million to RM400 million based on previous contracts.
Another possible contract is Eastern & Oriental’s Plot 16A-1 development on Andaman Island. The project has an estimated gross development value of RM680 million, with RHB estimating a potential construction contract value of about RM272 million.
Following the stronger contract replenishment outlook, RHB raised its Kerjaya Prospek earnings forecasts by 3% for FY26, 6% for FY27 and 3% for FY28.
The research house also increased the target price-to-earnings multiple for Kerjaya Prospek’s construction business to 17 times from 16 times in its sum-of-parts valuation.
RHB said the higher multiple reflects the group’s growing potential to secure industrial construction jobs, including data centres.
This resulted in a new sum-of-parts-derived target price of RM3.87, which includes a 2% environmental, social and governance premium.
Beyond data centres, RHB identified potential involvement in major infrastructure developments as another catalyst for Kerjaya Prospek.
The research house cited that Kerjaya Prospek, through a consortium with SinoHydro Corp and Power China Group, is eyeing the second package of the Penang Light Rail Transit project, estimated to be worth RM4 billion.
Securing additional industrial contracts, particularly semiconductor facilities, could also provide another re-rating catalyst.
RHB noted that Kerjaya Prospek’s last industrial project was its involvement in the Texas Instruments project with Samsung C&T.
With its record data centre win broadening the group’s construction portfolio beyond its traditional building projects, a RM5.9 billion outstanding order book and further potential contract opportunities ahead, RHB maintained its BUY call and raised its target price to RM3.87.
