9MFY19 CNP of RM103.9m made up 67%/71% of our/consensus full-year estimates. Maintain our earnings forecasts as the final quarter could come in sequentially stronger on the back of outstanding order-book of RM3.4bn. Upgrade to MP with a SoP-driven TP of RM1.50.

Within expectations. 9MFY19 CNP of RM103.9m came in within expectations, representing 67%/71% of our/consensus full-year estimates. We deem this to be in-line as 4QFY19 could come in sequentially stronger underpinned by outstanding order-book of RM3.4bn.

Result highlight. 9MFY19 CNP was flat YoY, as a slightly lower top- line was mitigated by marginal improvement in EBIT margin (18% vs 17% previously). Bottom-line was also slightly dampened by slightly higher effective tax rate of 25% (vs. 23%).

Earnings visibility from high outstanding order-book. Kerjaya has secured RM1.3b of construction jobs YTD, surpassing its full-year internal target of RM1.2bn. This takes its outstanding order-book to RM3.4b, which will underpin earnings visibility for the next 3 years.

Earnings estimates maintained. Post results, we make no changes to our FY19-20E earnings..

Upgrade to MARKET PERFORM with a SoP-derived Target Price of RM1.50 (from RM1.20 previously). This is anchored by its construction segment which is valued at CY20 P/E of 10.7x (at 3-year mean) (please refer to SoP table overleaf).

Risks to our call include: lower-than-expected job wins, delay in construction progress and lower construction margins.

Source: Kenanga Research - 27 Nov 2019