FY21 CNP of RM97m came within expectations at 102%/101% of our/consensus estimate. Positively, 2.5 sen dividend declared led YTD dividends to 3.5 sen – above our 2.7 sen target. For FY22E, we and management are targeting RM1.2b worth of replenishment in which they have secured YTD wins of RM710m. Meanwhile, we are targeting RM200m of sales for their property arm with two planned launches (GDV of RM630m) in FY22. Post results, we keep OP call and SoP-TP of RM1.50.

Well within expectations. FY21 CNP of RM30.4m led FY21 CNP to RM97.0m – within our/consensus expectation at 102%/101% of estimate. Nonetheless, the 2.5 sen declared this quarter brought total YTD dividends to 3.5 sen (45% payout)– above our 2.7 sen estimate (35% payout assumption).

Highlights. 4QFY21 CNP of RM30.4m increased 26% QoQ, mainly due to higher revenue (+27%) as productivity increased amidst the absence of lockdown as experienced in 3QFY21. We note that this quarter’s construction PAT margin of 12% had rebounded back to pre- pandemic levels despite rising building material costs throughout FY21A – a positive sign indicating that KERJAYA has been managing operating costs well. Meanwhile, FY21 CNP of RM97.0m improved 8% YoY due to easier lockdown measures compared to the various MCOs implemented in FY20.

For FY21A, Kerjaya replenished RM908m of jobs – in line with management’s RM1.0b guidance but a tad below our RM1.2b target. For FY22E, we and management are targeting RM1.2b worth of jobs backed by a tender-book of RM1.5-2.0b mainly comprising building jobs. YTD, Kerjaya has already secured RM710m job (from a single client) to construct 6 blocks of high-rise (Astrum Ampang) in KL.

In the immediate future, we foresee a higher number of jobs coming from Datuk Tee’s (Kerjaya’s major shareholder) 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 RM4.1b (c.4x cover) as of Feb 2022.

For its property arm, planned launches from Monterez Shah Alam (GDV: RM250m) and Yakin Land (GDV: RM380m) are slated for 1HCY22 should there be no hiccups. We are targeting FY22E sales of RM200m to be derived from these two projects.

4QFY21 net cash level of RM176.3m (-0.4% QoQ; -5% YoY) remains healthy with no anomalies observed. Meanwhile, total receivables growth of 16% YoY remains normal in tandem with the higher revenue growth of 19% YoY. 

Post results, we maintain FY22E earnings and introduce FY23E earnings of RM161m.

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 - 1 Mar 2022