9MFY21 CNP of RM66.6m came within expectations at 71%/70% of our/consensus estimate. No dividend declared as expected. YTD replenishment of RM908m is tracking our RM1.2b target (management targets RM1.0b). Post results, FY21-22E earnings, OP call and SoP-TP of RM1.50 are maintained.

Within expectations. 3QFY21 CNP of RM24.2m led 9MFY21 to CNP of RM66.6m – within our/consensus expectation at 71%/70% of full-year estimate. No dividends as expected.

Highlights. 3QFY21 CNP of RM24.2m increased 51% QoQ, mainly due to higher revenue (+17%) as productivity picked up expeditiously during the quarter with works allowed to resume in August 2021. Note, July 2021 suffered almost a complete lockdown similar to June 2021. 9MFY21 CNP of RM66.6m improved 7% YoY due to easier lockdown measures compared to the various MCOs implemented in 9MFY20.

YTD, Kerjaya has replenished RM908m of jobs (comprising 6 jobs), in line with our target of RM1.2b (management guides for RM1.0b). Target is backed by a tender-book of RM1.5-2.0b 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 RM3.6b (c.3.5x cover).

For its property arm, planned launches from Monterez Shah Alam (GDV: RM250m) and Yakin Land (GDV: RM380m) initially slated for 2HCY21 has been deferred to 1HCY22 due to: (i) delay in showroom construction stemming from MCO, and (ii) the slightly soft market currently as viewed by management. We are mildly negative on this deferment as launches pushed to next year will not be able to capitalise on the HOC benefits ending by this year end.

We anticipate 4QFY21 earnings be better than 3QFY21 upon normalisation of construction activities as Kerjaya’s workers are now 100% vaccinated. That said, earnings are unlikely to achieve the quantum as its heydays of FY19 (>RM30m/quarter) given the some shortage in labour coupled with the higher material costs now.

Post results, maintain FY21-22E earnings.

Keep OP on unchanged TP of RM1.50 anchored by a construction PER of 11x. We continue to like Kerjaya for its reliable earnings delivery, clear pipeline of projects which promotes bottom-line growth, and prudent cash management.

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

Source: Kenanga Research - 26 Nov 2021