PETALING JAYA: IJM Corp Bhd ’s outstanding construction order book and unbilled sales for its property division is expected to sustain the group’s earnings over the near term.
TA Research said the group’s outstanding construction order book is around RM6.6bil, translating to about 6.2 times its financial year 2023 (FY23) construction revenue.
IJM Corp’s property division is supported by unbilled sales of RM2.5bil, it said.
“This will provide solid earnings visibility for the group over the next two years,” the research house said in a report yesterday.
Meanwhile, CGS International Research said IJM Corp has “a plethora of construction projects” to look forward to.
“IJM Corp won RM3.6bil worth of new contracts from April 2023 to February 2024. We think it is on track to achieve its RM4bil target for FY24.
“Potential new wins may come from the North Pantai Expressway extension as well as industrial warehouses and data centres leveraging on its industrial building systems plant in Bestari Jaya, Selangor.”
CGS International Research noted that IJM Corp’s recent wins include the KLIA Aero Train project (RM105mil) and infrastructure work in Kuantan, Pahang (RM147mil).
“We are positive on IJM Corp making inroads into Sarawak.
“It also participated in the request for information for the KL-Singapore high-speed rail and we expect it to be a frontrunner for the MRT 3 and Penang LRT projects.
“This is given its strong track record in the mass transit arena, as evidenced by its step-in role for the Johor Baru-Singapore Rapid Transit System.”
Meanwhile, RHB Investment Bank said it is still possible for IJM Corp to clinch new job wins of up to RM4bil or even more for the current financial year.
“We adjust FY24 to FY26 earnings upwards by 10% to 11%, as we impute higher contributions from the property arm.
“We are also lowering our holding company discount to 15% (from 20%) in our sum-of-parts valuation to reflect IJM Corp’s potential to clinch jobs in Sarawak and Indonesia.
“IJM Corp, together with a Sarawak-related entity, plans to build a pile manufacturing facility in the state, in addition to a proposal to be involved in Indonesia’s Nusantara state civil servant housing project, worth circa RM1bil,” it said.
For the third quarter ended Dec 31, 2023, IJM Corp saw its net profit grow 34.2% year-on-year to RM100.4mil, as revenue escalated by 34% to RM1.48bil.
Cumulatively, for the nine months up to Dec 31, 2023, net earnings more than doubled to RM295mil, while turnover rose by 28.2% to RM4.2bil.
TA Research said IJM Corp’s latest results beat its and consensus’ expectations.
“The positive surprise was mainly due to higher-than-expected profit contributions from the property and infrastructure segments,” it said.
RHB Investment Bank also concurred that IJM Corp’s earnings surpassed expectations.
“IJM Corp’s job replenishment trend has improved and it is in a sweet spot to take on upcoming major infrastructure projects.
“With that, we forecast a three-year earnings compounded annual growth rate of 17%,” it said.