KERJAYA registered 1QFY26 core net profit (CNP) of RM57.3m (+24.5% YoY; -14.1% QoQ). This is in line with ours (25.2%) and consensus (23.3%) expectations.
We expect KERJAYA to continue delivering resilient earnings performance, supported by its sizeable outstanding order book of RM4.4bn, translating into a book-to-bill ratio of 1.8x.
Maintain BUY with an unchanged TP of RM3.10, based on 15.0x PE applied to FY27F EPS of 20.6 sen, alongside a three-star ESG rating.
Within Expectations. KERJAYAregistered 1QFY26 core net profit (CNP) of RM57.3m (+24.5% YoY; -14.1% QoQ). This is in line with ours (25.2%) and consensus (23.3%) expectations. Notably, the Group’s first-quarter performance has historically been seasonally softer due to the higher concentration of public holidays during the period.
YoY. CNP grew +24.5% YoY, driven by the completion of several construction projects during the quarter, alongside continued resilience from the Group’s Property Development division. Despite the Construction segment recording a -10.4% decline in revenue recognition to RM378.4m, segmental CNP increased +7.4% to RM55.8m, resulting in a +245bps expansion in PAT margin to 14.8%. The stronger margin performance was attributable to provisions write-back for construction projects that were previously accounted for but not utilised. Meanwhile, the Property Development division registered a robust +38.5% increase in revenue to RM68.0m, supported by healthy take-up rates at The Vue and Papyrus, which achieved take-up rates of 99% and 93%, respectively. However, segmental PAT declined marginally by -3.4% to RM7.3m.
QoQ. Revenue declined -33.5% YoY to RM446.8m, while CNP fell at a moderate pace of -14.1%, supported by resilient margin performance which saw net margins improving 271bps. The weaker top-line performance was attributable to slower revenue recognition within the Construction segment, which contracted -31.9%, alongside a -41.0% decline in the Property Development segment as ongoing developments approached the tail end of their construction cycles.
Dividends. The Group declared a first interim dividend of 3.5 sen per share, with an ex-date of 11 June. Following the stronger-than-expected payout, we revise upward our FY26F dividend per share assumption from 12 sen to 14 sen, underpinned by the Group’s robust net cash position and consistently healthy net operating cash flow.
Outlook. We expect KERJAYA to continue delivering resilient earnings performance despite prevailing macroeconomic uncertainties, supported by its sizeable outstanding order book of RM4.4bn, which translates into a healthy book-to-bill ratio of 1.8x based on our FY26F revenue forecast. This is further complemented by a robust tender book of RM2.0bn, while management continues to target a gradual rebalancing of its project portfolio toward a 35% external and 65% internal project mix. We view this strategy positively as it broadens the Group’s client base, strengthens earnings sustainability and progressively reduces reliance on related-party contracts over the longer term. Meanwhile, margins are expected to remain well supported by operational efficiencies, as c.50% of the Group’s outstanding order book is concentrated within the Andaman Island. The close proximity of projects is expected to generate cost savings through lower mobilisation, procurement and labour-related expenses.
Earnings Revision. We make no changes to our earnings forecast.
Valuation & Recommendation. Maintain our BUY rating on KERJAYA with an unchanged TP of RM3.10, based on a 15.0x PE applied to FY27F EPS of 20.6 sen, alongside a three-star ESG rating.
Risks. Rising material costs, labour shortages and oversupply of high-rise residential projects in the property sector.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.944524 | 3.976284 |
| EUR | 4.601627 | 4.606454 |
| CNY | 0.581937 | 0.582543 |
| HKD | 0.503652 | 0.507204 |
| SGD | 3.085855 | 3.107667 |