Thriving in a challenging market. Despite facing headwinds in construction and property markets, KERJAYA is envisaged to deliver a steady FY19-22 EPS CAGR of 9%, supported by its robust outstanding order book of RM3.6bn (~3Y earnings visibility) and superior margins against peers coupled with steady job flows from a diverse client pool amid strong track record and timely project delivery. After sliding 29% from YTD high of RM1.44, downside risk seems limited, cushioned by company’s share buy-back exercise, undemanding valuation at 9x FY21E P/E (62% below peers) and a strong net cash of RM182m or 14.7sen per share. Technically, the bullish downtrend line breakout will spur prices higher towards RM1.11-1.26 upside targets.

A bullish downtrend line breakout. After tumbling 29.3% from 3M high of RM1.26 (2 Sep) to a low of RM0.89 (4 Nov), Kerjaya’s share prices has been steadily firming up and broke the critical LT downtrend line resistance (from 52-week high of RM1.44 on 14 Jan) yesterday, supported by active volume of 4.68m shares (vs 90D average 0.63m). The bullish downtrend resistance breakout is likely to spur prices towards RM1.11 (50% FR) and RM1.18 (61.8% FR) before hitting our LT target at RM1.26 levels. Supports are pegged at RM0.96 (50D SMA) and RM0.94 (support trend line from RM0.79). Cut loss at RM0.92.

Source: Hong Leong Investment Bank Research - 2 Dec 2020