Kerjaya Prospek Group Bhd - Solid Start to FY25
Thu, 29-May-2025 06:43 am
by Research Team • Apex Research

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KERJAYA (7161)

Target Price (RM)

2.500

Recommendation

Buy

  • KERJAYA’s 1QFY25 CNP came in at RM46.1m (+6.1% qoq, +37.3% yoy), in line with ours and market expectations.

  • The Group declared a first interim dividend of 3.0 sen in 1QFY25, payable on 30 Jun 2025, which is in line of our FY25 DPS projection of 12.0 sen.

  • The Group’s project pipeline remains strong at RM4.0bn with ongoing projects from KPPROP and E&O, and further expansion through a 49% stake acquisition in AVL.

  • Maintain BUY recommendation with an unchanged TP of RM2.50, based an assigned 15.0x P/E multiple to its FY26F EPS of 16.6 sen, along with a three-star ESG rating.

 

Within expectations. KERJAYA’s 1QFY25 CNP came in at RM46.1m, accounting for 23% of our full-year forecast and consensus estimates. The results came within expectations, primarily attributable to the Group’s increased progress billings from ongoing construction jobs and property sales.

 

Dividend. The Group declared a first interim dividend of 3.0 sen in 1QFY25, payable on 30 Jun 2025, which is in line of our FY25 dividend per share (DPS) projection of 12.0 sen.

 

YoY. 1QFY25 CNP rose 37.3% yoy, driven by increased construction activities from RM1.58bn worth of contracts secured in CY24. As at end-March, the Group has secured RM870.3m worth of new contracts, accounting for 48% of our FY25 orderbook target of RM1.8bn and bumping the outstanding orderbook to RM4.0bn. This sizeable orderbook is expected to keep the Group busy for the next three years. On the property front, The Vue @ Monterez (GDV: c.RM300m) and Papyrus @ North Kiara (GDV: c.RM500m), with take-up rates of c.91% and c.65% respectively as of end-March have also supported earnings. We expect further contributions from the property segment in FY25.

 

QoQ. CNP rose 6.1% qoq, while revenue declined 21.1% qoq, reflecting normalised construction billings following a strong 4QFY24 that benefited from accelerated work recognition. Nevertheless, the Group’s core net margin of c.9% continues to support earnings stability despite the revenue decline.

 

Outlook. KPPROP and E&O, the Group’s sister companies, are expected to remain key sources of construction jobs. KPPROP is slated to launch two high-rise residential projects in the Klang Valley by CY25 — a RM290m GDV project in Shah Alam and a RM500m GDV project in Damansara Damai. It also holds a 61-acre land bank, with 40 acres still available for future developments. Meanwhile, E&O is rolling out RM2bn worth of projects at its Andaman Island development in Penang by CY25, with RM1.1bn remaining. Additionally, the Group plans to acquire a 49% stake in Aspen Vision Land Sdn Bhd (AVL) for RM98m to co-develop Aspen Vision City in Batu Kawan, Penang. The upcoming developments on the 35-acre land parcel, valued at RM5bn, will comprise hotels, residences, retail units, and office buildings, unlocking further construction and property development earnings.

 

Earnings Revision. Forecasts maintained, as results were within expectations. 

 

Valuation & Recommendation. We maintain our BUY recommendation on KERJAYA, with an unchanged TP of RM2.50, based an assigned 15.0x P/E multiple to its FY26F EPS of 16.6 sen, along with a three-star ESG rating.

 

Risks. Rising material costs, labour shortages, and high-rise office oversupply in the property sector.

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