Kerjaya Prospek Group Berhad: A Resilient Contender in Malaysia's Evolving Construction Sector Amid 2Q25 Growth Surge

Introduction
Kerjaya Prospek Group Berhad (KLSE:KERJAYA) has emerged as a standout performer in Malaysia's construction sector, defying market skepticism with a 36.4% year-on-year revenue surge to RM539.5 million in 2Q25 and a 46.6% leap in net profit to RM54.4 million. While industry forecasts hint at slowing growth due to margin pressures and regulatory headwinds, Kerjaya's disciplined debt management, expanding order book, and improving earnings per share (EPS) trajectory position it as a compelling long-term value play.

Accelerating Profitability and Strategic Diversification
Kerjaya's 2Q25 results underscore its ability to outperform sector trends. The construction segment drove RM470 million in revenue (+25.4% YoY), while the property development arm nearly doubled to RM68.8 million, fueled by strong take-up rates at projects like The Vue @ Monterez. This diversification into property development—bolstered by the recent acquisition of a 7.4-acre freehold land in Klang Valley—creates a dual revenue stream, insulating the company from cyclical construction volatility.

The company's order book of RM3.9 billion as of June 30, 2025, including RM870.3 million in new contracts, provides visibility for earnings until 2028. This robust pipeline, coupled with a 10% net profit margin (consistent with prior years), highlights Kerjaya's operational efficiency. Notably, its EPS jumped to 4.33 sen in 2Q25 from 2.94 sen in 2Q24, outpacing the industry's average growth of 6.1% in 2025.

Competitive Positioning Amid Sector-Wide Challenges
The Malaysian construction sector faces headwinds, including elevated material and labor costs, and potential margin erosion from a broadened Sales and Service Tax (SST). However, Kerjaya's proactive risk management—such as sourcing steel from Brazil to mitigate U.S. tariff impacts—demonstrates its agility. The company's net cash position of RM316.7 million and a current ratio of 2.0x further reinforce its financial resilience, enabling strategic investments like the RM98 million acquisition of a 49% stake in Aspen Vision Land Sdn Bhd. This move not only secures a RM1.6 billion contract target but also positions Kerjaya to benefit from property sales in Penang's Aspen Vision City, a high-conviction growth driver.

While larger peers like IJM Corp and Gamuda are highlighted for their order book strength, Kerjaya's dual focus on construction and property development, combined with its disciplined dividend policy (6 sen per share for 1H25, or 75.1% of net profit), offers a unique value proposition. Analysts project its revenue to grow at 7.5% annually over the next three years, slightly below the sector's 13% but supported by a diversified business model and strong free cash flow conversion.

Investment Thesis: A Long-Term Value Play
Kerjaya's forward P/E ratio of 11.7x, a 14% discount to peers, reflects undervaluation despite its robust fundamentals. The company's alignment with structural growth drivers—such as the RM163.6 billion data centre boom and government-led digitalization initiatives—positions it to capitalize on long-term trends. Its proactive adoption of Building Information Modelling (BIM) and prefabrication under the Construction 4.0 Strategic Plan further enhances efficiency and competitiveness.

For investors, Kerjaya's disciplined debt management, expanding EPS, and strategic acquisitions make it a resilient bet in a consolidating industry. While short-term margin pressures persist, the company's ability to convert earnings into dividends and its strong balance sheet provide a margin of safety.

Conclusion
Kerjaya Prospek Group Berhad exemplifies how strategic diversification, operational discipline, and proactive risk management can drive outperformance in a challenging sector. As Malaysia's construction industry navigates macroeconomic uncertainties, Kerjaya's robust order book, improving EPS trajectory, and alignment with long-term growth catalysts make it a compelling long-term value play. Investors seeking exposure to a resilient, well-positioned firm should consider adding KERJAYA to their portfolios.