1HFY21 CNP of RM42.4m came in within ours but below consensus expectations at 45%/40% of estimates. 1.5 sen dividend declared is also within. YTD replenishment of RM523.5m is tracking our RM1.2b target (management targeting RM1.0b). Currently, >60% of its workers are fully vaccinated and management is targeting for 80% to be fully vaccinated by September. Consequently, this would enable operations to be at 100% by 4QFY21. Post results, maintain FY21-22E earnings, OP call and SoP-TP of RM1.50.

Within our but below consensus expectations. 2QFY21 CNP of RM16.0m led 1HFY21 to CNP of RM42.4m – within our expectation (at 45%) but below consensus (at 40%) of full-year estimates. We believe consensus might have underestimated the impact of FMCO which commenced in June 2021. The 1.5 dividend declared is also within.

Highlights. 2QFY21 CNP of RM16.0m was down 39% QoQ mainly due to lower revenue (-29%) stemming from the FMCO lockdown which halted construction works for the month of June 2021. 1HFY21 CNP of RM42.4m improved 12% YoY due to easier lockdown measures coupled with a shorter duration as compared to the MCO 1.0 implemented in 1HFY20.

YTD, Kerjaya has replenished RM523.5m of jobs, in line with our target of RM1.2b (management guides for RM1.0b). Target is backed by a tender-book of RM1.5b mainly comprising building jobs. In the immediate future, we foresee a higher number of jobs coming from Datuk Tee’s* two other listed companies (E&O and KPPROP) instead of external parties. Based on our estimates, we foresee c.RM2.6b worth of construction replenishments from E&O and KPPROP in the next three years. Construction order-book remains healthy at RM3.4b (3.0x cover).

For now, planned property launches from Monterez (GDV: RM250m) and Yakin Land (GDV: RM380m) slated for 2H21 remains intact.

Vaccination update. 90% of workers have obtained the first dose, and >60% have completed 2 doses allowing them to operate at 80% now. Target to have 80% of workers by Sep 2021 to resume operations at 100%.

Post results, maintain FY21-22E earnings estimates.

Keep OP on unchanged TP of RM1.50 anchored by a construction PER of 11x. We believe Kerjaya is a good proxy to an economic re-opening play given its reliable earnings delivery

Source: Kenanga Research - 27 Aug 2021