Kerjaya Prospek Group (KPGB) 2QFY23 core net profit climbed 13.2% QoQ due to improved construction efficiency. The Group’s construction segment registered 4% QoQ improvement, due to recovery from labour shortage which led to higher progress billings. The property segment however, made no contribution this quarter as no projects have been launched. Nonetheless, KPGB’s full-year core net profit is slightly below our and consensus estimates, accounting for 41.8% respectively. As such, we trimmed our FY23 orderbook replenishment assumption by 7% to RM1.4bn while Management has lowered its FY23 orderbook target by 20% to RM1.2bn. KPGB’s YTD new wins represent 70% of our revised RM1.4bn orderbook replenishment assumption. Hence, we adjust our FY23-25F forecast downwards by an average of 9.5% per annum after adjusting our billings assumptions. Our Outperform rating is maintained with a lower SOP TP of RM1.55 (previously RM1.70) following the changes made to our forecast. That aside, KPGB has proposed a second interim dividend of 2.0 sen, bringing YTD dividends to 4.0 sen.

• Revenue grew marginally QoQ by 4%. The Group’s construction segment registered 4% QoQ improvement due to recovery of labour shortage which led to higher progress billings from its ongoing projects. The property segment however, made no contribution this quarter as no projects have been launched. We anticipate The Vue @ Monterez official launching in 2H2023.

• FY23 orderbook target lowered by 7%. We have trimmed our FY23 orderbook replenishment target to RM1.4bn from RM1.5bn, which is higher than Management’s revised orderbook replenishment target of RM1.2bn as we believe the Group could still surpass its job wins this year. YTD new wins amounted to 70% of our new FY23 orderbook replenishment assumption of RM1.4bn. Nonetheless, outstanding orderbook stood at RM4.5bn, providing earnings visibility to the Group for 2-3 years. As-to-date, tenderbook is at approximately RM1bn mark, consisting of 2 projects from its interested related party, E&O, with a combined GDV of RM200-400m.

Source: PublicInvest Research - 21 Aug 2023