• Maintain BUY (TP: RM2.26). Kerjaya Prospek Group Berhad (Kerjaya) reported a Core Net Profit of RM70.6mn for 1HFY24, reflecting a 15.8% YoY growth. While this accounts for 41.3% and 41.2% of ours and consensus estimate, we deem this as within our forecast, considering our expectation of stronger 2H24 result. Revenue increased by 20.8% YoY to RM732.6mn, compared to RM606.5mn in the previous year, driven primarily by a 16.3% rise in its construction segment, alongside a modest improvement in property sales. The company declared a second interim DPS of 2.5sen, bringing 1H24 DPS to 5sen which is higher than 1H23 DPS of 4sen. We reiterate our BUY call on Kerjaya, with a SOP-derived TP of RM2.26.

• Key highlights. In 2QFY24, the company's QoQ increase in revenue and Core Net Profit, largely attributed to improved construction work progress and modest growth in the property segment. However, operating costs rose YoY due to higher work volumes, particularly in its industrial building project. Kerjaya's outstanding orderbook currently stands at RM4.4bn, with 48% derived from related party transactions (RPT) while RM1.3bn in new contract wins was mainly from Penang's projects.

• Earnings Revision. We maintain our earnings for FY24F-FY26F.

• Outlook. We remain positive with Kerjaya's outlook as we expect the construction division to secure a substantial inflow of projects, with related party transaction (RPT) contracts projected to comprise 70-80% of the outstanding orderbook. The company is also actively bidding for external building contracts while pursuing data center and industrial projects valued up to RM2.0bn and potential win from Penang airport extension project. We anticipate stronger revenue recognition in 2HFY24, driven by the completion of key projects and further bolstered by an improved take-up rate in the property segment.

Source: BIMB Securities Research - 28 Aug 2024