• Maintain BUY (TP: RM2.03). Kerjaya Prospek Group Berhad (Kerjaya) posted a Core Net Profit of RM33.6mn for 1QFY24, reflecting a 14.3% YoY increase, which constitutes 19.6% of our projection and is in line with our expectations. Additionally, revenue rose by 13.4% YoY, reaching RM337.1mn compared to RM297.2mn in the previous year. This growth was primarily driven by increased revenue from the construction segment and higher contributions from the property division, attributed to improved sales from The Vue @ Monterez project. We reiterate our BUY call for Kerjaya, with SOP derived TP of RM2.03.

• Key highlights. In 1QFY24, QoQ performance declined mainly due to the reduced progress in construction work activities. Revenue decreased by 31.1% QoQ from RM489.0mn to RM337.1mn, while Core Net Profit saw a slight decline by 5.9% QoQ. Notably, net cash increased to RM213.5mn from RM167.2mn in FY23, demonstrating stronger financial health. The company has declared a first interim single-tier dividend of 2.5sen for 1QFY24. Given its better performance, we could anticipate a total dividend of 10sen for FY24, up from targeted 8.0sen, which would translate to a dividend yield of 5.5%.

• Earnings Revision. We maintain our earnings for FY24F-FY26F.

• Outlook. We anticipate that the Property division will boost the bottom line moving forward, especially with the soft launch of Papyrus @ North Kiara last month, with revenue expected to be recognized by 2QFY24. This will be further supported by the progressive take-up rate from The Vue @ Monterez. Meanwhile, the construction division, which contributed over 90% of this quarter’s earnings, is expected to see more jobs flow, primarily from related party transaction (RPT) contracts associated with Seri Tanjung Pinang phase 2 (STP2) development projects. Additionally, within its RM1.5-2.0bn tender book, Kerjaya is also pursuing external jobs through its partnership with Samsung C&T, encompassing industrial buildings and the Penang airport extension works.

Source: BIMB Securities Research - 30 May 2024