CGS expects Kitacon to see stronger earnings in 2HFY2025 from project completions, better profit margins

• Growing market interest for Kitacon project developments could be reflected by a tenderbook of RM913 million (17% industrial and 83% residential projects) as of June 23, 2025.

KUALA LUMPUR (July 10): Kumpulan Kitacon Bhd (KL:KITACON) is expected to see stronger earnings in the second half of 2025 (2HFY2025), as township project developments Bandar Bukit Raja and Elmina reach completion, alongside better margin expansion, according to CGS International.

Growing market interest for Kitacon project developments could be reflected by a tenderbook of RM913 million (17% industrial and 83% residential projects) as of June 23, 2025.

“Kitacon is also actively expanding its client base by tendering for new clients’ projects, which should bring diversification and for future contract opportunities, in our view,” said the house in a note on Thursday.

Citing key points from the meeting with Kitacon management on June 19, the house said it was “more convicted that there is no material slowdown in Malaysia’s property sales or launches”.

CGS added that Kitacon has also secured RM375 million in new contracts, including an RM88 million residential project awarded by GuocoLand Group.

CGS said the group’s stronger earnings could potentially be driven by Kitacon’s ability to expand profit margins, allowing them to keep a greater portion of revenue as profits, by focusing on cost optimisation after seeing a 15.6% gross profit margin expansion in the first quarter of 2025 (1QFY2025).

The house noted that investors are overlooking Kitacon’s improving earnings growth, supported by margin trajectory and solid execution track records as a primary contractor to Tier 1 developers.

“Investors are ignoring its improving earnings and margin trajectory, and solid-execution track record, being a key contractor to Tier 1 developers,” said CGS.

“We like Kitacon as an attractive proxy for the resilient property sector,” it added.

The house raised its target price for Kitacon’s stock to RM1.43, while maintaining its “add” call on the stock.

The counter was unchanged at 75 sen, valuing the group at some RM375.3 million.

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