Tee: ‘This year is expected to be tough for construction companies due to low property sales, but sentiments are likely to improve in the fourth quarter.
KUALA LUMPUR: Construction company Kerjaya Prospek Group Bhd is poised to achieve its order book target of RM800mil for the year, backed by its track record of timely project delivery and prudent cost management.
The company, which deployed the industrialised building system (IBS), has notable clients including Eastern & Oriental Bhd, Eco World Development Group Bhd and SP Setia Bhd.
The group has used the IBS since 2010, which has reduced errors, cut down on labour cost as well as cash purchase of building materials.
Speaking at a briefing here yesterday, Kerjaya Prospek executive chairman Datuk Tee Eng Ho said that the group had set an internal order book target of RM600mil in FY16, but it managed to achieve RM1.5bil.
“The tenderbook value includes two phases of a Bank Negara project, among others.
“This year is expected to be tough for construction companies due to low property sales, but sentiments are likely to improve in the fourth quarter,” he said.
As of Dec 31, 2016, Kerjaya Prospek’s outstanding order book amounted to RM2.69bil which is sufficient to last the group until 2019.
To date, the group is working on 17 projects, of which three will be delivered this year.
For the fourth quarter ended Dec 31, 2016, the group registered revenue and net profit of RM235.49mil and RM26.22mil respectively.
On a year-on-year basis, its revenue and net profit surged to RM805.37mil and RM99.97mil.
The stellar financial performance was mainly attributed to the consolidation of results derived from the newly acquired Kerjaya Prospek (M) Sdn Bhd (KPSB) and Permatang Bakti Sdn Bhd subsidiaries.
Following the acquisition of KPSB in January last year, the subsidiary contributed RM733mil external revenue to the group.
It is also notable that the group has a relatively high net profit margin of 12.44%, compared with its peers, whose margins stood at 3% to 6%.
The construction segment has particularly mitigated the slowdown in the manufacturing segment which was due to the completion of existing projects and market competition.
Tee explained that the manufacturing segment was a complementary one, as manufactured products are not sold to third parties, but rather, furniture and cabinets are installed in the group’s construction projects.
With the encouraging take-up rate in Kerjaya Prospek’s property development project, the segment is also expected to contribute positively to the group’s earnings moving forward.
As of Dec 31, 2016, the group’s property development Vista Residences @ Genting Highlands has achieved a take-up rate of 61% and is 55% completed.
Kerjaya Prospek has net cash in hand of RM132.43mil.
Tee said that there are plans to utilise the cash for investments pertaining to construction activities, such as the acquisition of companies with machineries.
“We may also use the cash to purchase land for property development if the land price and location is right, but our primary focus continues to be on the construction segment,” he said.
Kerjaya Prospek’s dividend payout of RM20.28mil in 2016, representing a single-tier interim dividend of four sen per ordinary share, translated to a dividend payout ratio of 20%.
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