02-07-2025
Kerjaya Prospek banks on land buys and JV
PETALING JAYA: Kerjaya Prospek Group Bhd 's recent land acquisitions and joint-venture (JV) deal are expected to bode well for the group.
The initiatives signal a deliberate move by the construction and property development group to diversify its revenue base and gradually expand its footprint within the property sector, aligning well with its long-term growth agenda, according to TA Research.
'Although the gross development value (GDV) for the Jalan Puchong parcels has yet to be disclosed, we estimate a potential GDV range of RM900mil to RM1.7bil, based on GDV per acre assumptions between RM126mil and RM230.8mil.
'This suggests a highly attractive land cost-to-GDV ratio, with the RM112.8mil purchase price remaining well below the conventional 20% land cost threshold,' the research house said in a report yesterday.
Kerjaya Prospek, through its wholly owned subsidiary, Senandung Raya Sdn Bhd, has acquired three pieces of freehold land measuring a total of 2.99 ha along Jalan Puchong, Kuala Lumpur for a total purchase consideration of RM112.8mil.
Kerjaya Prospek, via Senandung Raya, had inked three separate sale and purchase agreements – two with Top Up Properties Sdn Bhd and one with Sunrise Bright City Sdn Bhd.
The newly acquired land parcels will serve as a landbank for Senandung Raya's property development activities.
These land plots are strategically located in the Klang Valley and are easily accessible via the Kesas Highway.
The area is surrounded by a few mature townships and close to plenty of amenities, including food and beverage outlets, shopping areas and hospitals with easy access to Kuala Lumpur City Centre via the Federal Highway, Lebuhraya Damansara Puchong and Kesas Highway.
The parcels are also located within 1km of Kerjaya Prospek's headquarters, facilitating ease of oversight and operational coordination.
The acquisitions will be funded through internally generated funds and/or bank borrowings, with the exact breakdown yet to be determined at this juncture.
The completion of the transaction is expected by September 2025.
TA Research said the land price of RM350 per sq ft also represents a 29% discount to Mah Sing's recent acquisition of a nearby 5.2-acre site for the M Aurora project, announced in November 2024, which was transacted at RM495 per sq ft.
'This reinforces our view that Kerjaya Prospek has secured a competitively priced land bank with ample upside potential,' the research house said.
Meanwhile, TA Research said the group's JV with Aspen Vision Tanjung Sdn Bhd (AVT) provides a capital-light entry into Penang's affluent Tanjung Bungah corridor, expanding Kerjaya Prospek's northern region presence.
'The JV structure enables Kerjaya Prospek to retain development upside while mitigating execution risks and capital exposure.
The collaboration also reflects a sound strategy of leveraging AVT's groundwork and local expertise,' the research house said.
Kerjaya Prospek, through its wholly-owned subsidiary, Kerjaya Prospek Ventures Sdn Bhd, formed a JV with AVT, a subsidiary of Singapore-listed Aspen (Group) Holdings Ltd, to jointly develop two freehold land parcels measuring 4.5 acres in Tanjung Bungah, Penang.
A special purpose vehicle, Tanjung Bungah Development Sdn Bhd (TBD), has been established to undertake the joint development, in which Kerjaya Prospek Ventures holds a 60% stake and AVT holds the remaining 40%.
Additionally, the land carries a total consideration of RM117mil, comprising RM105mil in cash and RM12mil via in-kind property units.
The planned development will include residences, serviced apartments and retail units, with the GDV to be confirmed later.
AVT had paid RM53mil and incurred RM7mil in related predevelopment costs.
TBD will reimburse AVT a total of RM60mil, of which RM4mil will be converted into AVT's share capital in TBD and RM56mil will be recognised as advances.
TBD will also assume responsibility for the balance of the RM52mil cash payment through bank borrowings and/or internal resources.
Completion of the transaction is expected by December 2025.
Furthermore, TA Research noted these acquisitions are well supported by the group's solid balance sheet, underpinned by a robust net cash position of RM336.7mil.
'Based on previous management guidance, the group could comfortably leverage up to about RM700mil in financing facilities–translating to a manageable 0.3 times net gearing ratio, if fully drawn,' the research house said.
TA Research maintained a 'buy' call on Kerjaya Prospek with an unchanged target price of RM2.97.
RHB Research, which also maintained a 'buy' call on Kerjaya Prospek with a target price of RM2.80, said there are no changes to its earnings estimates pending further details (such as the GDV) and completion of the deal.
