Kerjaya Prospek Group’s (KPGB) FY23 performance ended in line with our and consensus estimates, accounting for 100% and 97% respectively. 4QFY23 core net profit declined 7.5% QoQ, attributed mainly to construction margin deterioration due to higher construction costs. Elsewhere, property division also recorded lower sales (-40% QoQ) at RM10.6m from RM17.7m in 4QFY23. Going into FY24, we expect the Group to garner RM1.5bn construction orderbook from RM1.3bn in FY23 (+14% YoY) as high-rise and industrial building jobs remain robust, in line with MoF’s construction GDP projection at 6.3% from 6.1% in 2023. However, we maintain our earnings forecast for now due to persistent building material costs which may erode construction margins further. Our Neutral call on KPGB is affirmed with an unchanged SOP TP of RM1.52, pegged at 11x PER. That aside, Management has announced a fourth interim dividend of 2.0 sen during the quarter, bringing YTD dividends to 8.0 sen.

• Revenue rose 35% QoQ. KPGB achieved exemplary topline growth in 4QFY23 owing to the performance of its construction division. Its core division grew 38.8% QoQ due to higher revenue recognition as a result of higher progress billings. On the flip side, the property division reported a lower contribution of RM10.6m in 4QFY23 from The Vue @ Monterez and saw takeup at about 60% as-to-date.

• Our view. Going into FY24, we expect the Group to garner RM1.5bn construction orderbook from RM1.3bn in FY23 (+14% YoY) as high-rise and industrial building jobs remain robust, in line with MoF’s construction GDP projection at 6.3% from 6.1% in 2023. However, we maintain our earnings forecast for now due to persistent building material costs which may erode construction margins further. KPGB’s existing unbilled orderbook stood at RM4.2bn, providing earnings visibility up to 2-3 years. Cumulative YTD new wins amounted to RM377.8m, representing 25% of our FY24 target orderbook.

Source: PublicInvest Research - 1 Mar 2024