KPPROP reported a 4QFY26 core net profit (CNP) of RM3.6m (-8.4% YoY; +16.1% QoQ). This brings FY26 CNP to RM11.3m, which accounts for 116.8% of our estimates and significantly exceeded expectations.
We expect the Group’s performance to remain resilient, supported by its robust unbilled sales of RM100m, sizable undeveloped landbank of 61 acres and inventory valued at RM362.4m.
We raise our FY27F/FY28F earnings forecasts by +3.4%/+2.3% after imputing higher margin assumptions for the Hospitality and Retail & Leasing segments, with lower finance costs.
Maintain a BUY recommendation with increased target price of RM0.40 (from RM0.39), derived from SOP valuation while incorporating a three-star ESG rating.
Results above expectations. KPPROP reported a 4QFY26 core net profit (CNP) of RM3.6m (-8.4% YoY; +16.1% QoQ). This brings FY26 CNP to RM11.3m, which accounts for 116.8% of our estimates and significantly exceeded expectations. The outperformance was primarily driven by a stronger-than-expected turnaround in the Property segment, which recorded a Profit Before Tax (PBT) to RM2.0m compared with a Loss Before Tax (LBT) of RM3.7m in the preceding quarter. The improvement was mainly attributable to lower finance costs following the capitalisation of borrowing costs, resulting in a RM0.4m reversal versus a RM4.1m finance expense.
YTD. FY26 CNP increased +56.0%, driven by stronger contributions from the Hospitality and Retail & Leasing segments. The Hospitality segment’s PBT rose to RM14.0m (+95.4%), supported by improved performance at Courtyard by Marriott Kuala Lumpur South, while the Retail & Leasing segment’s PBT climbed to RM4.4m (+273.5%) on contributions from Bloomsvale Shopping Gallery and Bloomsvale Office Tower. Earnings were further supported by lower finance costs following the capitalisation exercise. Segmental margins also improved, with Hospitality margin expanding by 491bps to 15.4% and Retail & Leasing margin rising by 1,185bps to 20.6%.
QoQ. Despite a -21.6% decline in revenue to RM42.1m, CNP rose +16.1%, mainly due to lower finance cost. However, earnings growth was partially offset by weaker contributions from the Hospitality segment, whose PBT fell -71.0% to RM1.6m amid softer banquet and event activities, coupled with cautious consumer spending and moderating domestic travel demand.
Outlook. We remain positive on KPPROP’s outlook, supported by its robust pipeline of upcoming launches, ongoing construction progress and healthy sales visibility. The Group’s unbilled sales remain healthy at an estimated RM100m and are expected to be progressively recognised through FY29. In addition, the Group maintains a sizeable undeveloped landbank of 61 acres (89.9%-Klang Valley, 8.0%-Penang, 2.1%-Melaka), providing a solid foundation for long-term developments. Earnings visibility is further underpinned by an inventory valued at RM362.4m, comprising 36.6% completed unsold units and 63.4% properties under construction. Looking ahead, we anticipate the Group to launch its Batu Kawan project in FY27, with an estimated GDV of RM720m, which should reinforce its strategic focus on the core property development segment.
Earnings Revision. Supported by the resilient performance of the Group’s Hospitality and Retail & Leasing segments, we have slightly raised our PBT margin assumptions for both divisions. We also take the opportunity to revise downward our finance cost assumptions. Consequently, we raise our FY27F/FY28F earnings forecasts by +3.4% and +2.3%, respectively.
Valuation. We maintain our BUY recommendation with an increased TP of RM0.40 (from RM0.39), derived from Sum-of-Parts (SOP) valuation and support by a three-star ESG rating.
Risk. Failure to monetise non-core assets, exposure to the cyclicality of the property sector and rising construction costs.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.949723 | 3.981539 |
| EUR | 4.614340 | 4.619218 |
| CNY | 0.585739 | 0.586367 |
| HKD | 0.504357 | 0.507919 |
| SGD | 3.092670 | 3.114543 |