MaybankIB Research said based on IJM’s pipeline of projects, the group’s management is confident of meeting its RM5bil job-win target for FY25.
PETALING JAYA: The earnings outlook for IJM Corp Bhd
has been revised higher on expectations its construction division will continue to anchor growth while its proposed purchase of a 50% stake in British construction company JRL Group is still a work in progress.
UOB Kay Hian Research (UOBKH Research) has raised its earnings forecast for the construction and property group for its financial years 2025 (FY25), FY26 and FY27 by 6%, 8% and 8%, respectively, on imputing higher construction earnings and margins, offset partially by delayed property sales.
The research house maintained its “buy” call on the counter with an unchanged target price of RM3.60 a share, valued against a 2025 price-earnings (PE) multiple of 25 times.
“This is slightly below 1.5 standard deviations to its five-year mean, which we believe is justified given the strong pipeline of construction projects and property launches,” UOBKH Research stated in its latest report on IJM.
IJM reported a core net profit of RM233.3mil (up 9.9% year-on-year) for its first half of FY25 ended Sept 30 (1H25), driven by robust construction activity.
Its property contribution remained soft in 1H25 due to delayed launches while the infrastructure segment reported losses due to a higher share of losses from overseas associates.
Kenanga Research, meanwhile, said the JRL acquisition creates synergies for IJM property arm, IJM Land, to expand in Britain and provides IJM with immediate entry into Britain’s developed construction market.
“The acquisition price, at a forward PE of 7.4 times, appears reasonable and it is a relatively small-scale acquisition that will not strain IJM’s balance sheet,” it added.
Kenanga Research has a target price of RM3.16 a share on IJM and upgraded the stock to “outperform” as the fall in its share price recently offers a buying opportunity.
The research house said it believes IJM is poised to get a slice of the Penang Light Rail Transit (LRT) project’s Mutiara Line given its involvement in previous LRT projects.
“Fundamentally, the group has strong earnings visibility underpinned by an outstanding construction order book of RM6.4bil and new property sales of RM613mil, while its Kuantan Port asset is the largest port in the East Coast capturing the expanding trade activities.
“IJM could potentially divest its toll roads to lighten its balance sheet and recycle capital, which would act as a re-rating catalyst,” Kenanga Research said.
Maybank Investment Bank Research (MaybankIB Research) said based on IJM’s pipeline of projects, the group’s management is confident of meeting its RM5bil job-win target for FY25.
“Its property business has unbilled sales of RM2bil and due to delays in launching some projects in the Klang Valley, IJM’s management thinks it may fall short of its property-sales target of RM2.2bil for FY25, and would likely see sales of about RM1.6bil to RM1.7bil instead,” the research house said.
MaybankIB Research kept its “buy” recommendation on the stock with a target price of RM3.70 a share.
