Property News

Kerjaya Prospek’s margin squeeze will not last, says chairman

KUALA LUMPUR (Feb 29): Construction firm Kerjaya Prospek Group Bhd’s net profit margin will likely improve in coming quarters on lower tax and potential writeback in provisions, said its chairman on Thursday.
Net profit margin for the fourth quarter ended Dec 31, 2023 (4QFY2023) came in at 7.3% from 10% over the same period a year ago. Chairman Datuk Tee Eng Ho noted that the tax rate was higher at 30% versus the usual 24% due to profit from construction of properties yet to be sold.
“In future, my tax may be lower, margin may be higher,” he said at an earnings briefing. Further, net profit margin during the quarter was also affected by provisions for delays in construction at older projects, whose progress was disrupted by the pandemic.
Kerjaya Prospek will make provisions while the company “sort [it] out with the client”, he said. “At the end of the day, if we can resolve, we write back,” he added.
Still, Kerjaya Prospek reported a 25% growth in net profit for 4QFY2023, attributable to improved progress for the group’s construction work.
Net profit grew to RM35.74 million or 2.83 sen per share for 4QFY2023 from RM28.6 million or 2.27 sen per share a year ago, while revenue jumped 71% to RM489.04 million from RM285.26 million over the same period, the group disclosed in a stock exchange filing on Thursday.

The construction group declared its fourth interim dividend of two sen per share, with ex-date on March 19 this year.
Net profit for FY2023 grew 15% to RM132.29 million, from RM114.8 million in FY2022, while revenue rose 30% to a record high of RM1.46 billion from RM1.12 billion.
Kerjaya Prospek said its balance sheet remained healthy as at 4QFY2023, with a net cash position of RM167.2 million and a current ratio of 3.4 times.
“We look forward to replicating our success in 2024 with commendable target contract awards of RM1.5 billion and maintaining a strong profitable track record as a reputable contractor in the industry,” said chief executive officer Tee Eng Tiong.
Eng Tiong said Kerjaya Prospek will continue pursue projects while focusing on the ongoing projects with an outstanding order book of RM4.2 billion as at 4QFY2023, of which 46.2% or RM1.9 billion are related party transactions.
Eng Ho controls about 70% stake in Kerjaya Prospek and 72% interest in real estate developer Kerjaya Prospek Property Bhd. He is also the executive chairman and largest shareholder Eastern & Oriental Bhd with 51% interest.
At the briefing, he said management maintained that targeted job wins for this year to be RM1.5 billion, and the group clinched RM377.8 million contracts year-to-date.
In terms of cost of construction, Eng Ho said building materials prices are stabilising, and he does not foresee renewed volatility in the short term.
Building material prices are “really unlikely” to spike with no signs of rapid turnaround in China’s property market, he noted.
Shares of Kerjaya Prospek were trading five sen or 3% higher at RM1.73 at 3.44pm, giving it a market capitalisation of RM2.19 billion.
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Source: EdgeProp.my