FY16 CNP of RM100.0m came in within expectations accounting for 101% and 100% of our and consensus estimates, respectively. No dividends declared in 4Q16, bringing total dividends declared in FY16 to 4.0 sen which is on the dot with our estimates. Maintain our FY17E earnings and introduce FY18E earnings of RM146.3m. Make no changes to our OP call and TP of RM2.64.

Well within expectations. FY16 CNP of RM100.0m came in within expectations accounting for 101% and 100% of our and consensus estimates, respectively. No dividends declared in 4Q16, bringing total dividends declared in FY16 to 4.0vsen which is on the dot with our estimates.

Results highlight. 4Q16 CNP of RM26.2m came in 2.9% higher QoQ underpinned by: (i) higher billings from property arm (+112%) as construction works for their maiden property project Vista Genting progresses and (ii) lower effective tax rates (- 0.7ppt). Balance sheet wise, net cash position improved slightly to RM128m vis-à-vis 3Q16’s net cash position of RM109m.

YoY comparison is immaterial as we note that order book from KPSB and PBSB amounting to RM1.6b (outstanding) was only injected from January 2016.

Bright outlook ahead. For FY17, KERJAYA targets to achieve RM800m worth of jobs on the back of their existing tender book of RM1.5b. While our FY17E replenishment target of RM1.6b is double that of management’s, we note that KERJAYA targeted KPI tends to be overly conservative – citing their initial FY16 replenishment target of RM600m versus achieved amount of RM1.5b. As of 31st Dec 2016, KERJAYA’s outstanding order-book stood at RM2.7b providing earnings visibility for the next 2.5 years. We expect job flows from their existing clientele’s upcoming/recent new launches, i.e. SPSETIA’s Setia Sky Seputeh (RM950m GDV) and E&O’s Puro Place (RM800m GDV).

Maintain FY17E earnings. Post results, we make no changes to our FY17E NP RM125.9m and introduce our FY18E NP of RM146.3m.

OUTPERFORM with unchanged TP of RM2.64. We continue to like KERJAYA for their conservative approach towards jobs selection – only taking up the job with clients that are good paymaster and making sure jobs secured are within their working capacity. We believe this strategy allows for a sustainable and robust growth towards bottom line in the long run. Hence, we reiterate our OUTPERFORM rating with an unchanged SoP- derived TP of RM2.64. Our TP implies 11.8x FY17 PER which is in line with our targeted peers’ range of 9.0-13.0x.

Source: Kenanga Research - 28 Feb 2017