Nov 1, 2013 ... IJM Corp Berhad. Maintain BUY. First job in FY14. Unchanged Target Price (TP):
RM6.35. INVESTMENT HIGHLIGHTS. • IJM Corp has been ...
01 November 2013 | Corporate update
Maintain BUY
IJM Corp Berhad First job in FY14
Unchanged Target Price (TP): RM6.35
INVESTMENT HIGHLIGHTS •
IJM Corp has been awarded a contract worth RM238.4m for the construction of two commercial blocks.
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Outstanding order book will rise to an estimated of RM3b.
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Budget 2014 to boost IJM Corp’s job order book further.
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We maintain our earnings forecast.
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Maintain BUY with unchanged target price of RM6.35.
Awarded RM238.4m contract. IJM Construction Sdn Bhd, a whollyowned subsidiary of the IJM Corp, has accepted letter of award from JKG Tower Sdn Bhd for the construction of two commercial blocks at Jalan Raja Laut, Kuala Lumpur worth RM238.4m. The workscope involves the building of 1 Block of 32-Storey Office Tower and 1 Block of 13-Storey Elevated Car Park. The job is expected to start mid this month with a duration of 26 months to complete. Assuming a PBT margin of 7% with the completion period of 2 years and 2 months, we expect this project to contribute RM16m (about RM2.8m and RM8.0m in FY14 and FY15) to IJM Corp’s PBT. Outstanding order book increases to RM3b. Prior to this job, IJM Corp’s new order book had been dry in 2013. This is its first job in 2013 and also in its FY14, lifting its outstanding order book to an estimated of RM3b.
RETURN STATS st
Price (31 October 2013)
RM5.80
Target Price
RM6.35
Expected Share Price Return
+9.5%
Expected Dividend Yield
+2.1%
Expected Total Return
+11.6% *
* We are maintaining a BUY and making an exception to our recommendation rule pending the IJM’s 2QFY14 result due soon.
STOCK INFO KLCI
1,806.85
Bursa / Bloomberg
3336/ IJM MK
Board / Sector Syariah Compliant
Yes
Issued shares (mil)
1,408.7
Par Value (RM) Market cap. (RM’m)
Budget boost. Budget 2014 had cited the construction of the 316-km of West Coast Expressway (WCE) and the Kuantan Port expansion. These two projects are expected to benefit IJM Corp the most. IJM Corp is the concession holders for both projects. Forecasts unchanged. We had previously assumed RM4b in new job wins after incorporating WCE external job packages. We expect WCE jobs to be rolled out in the coming months, as WCE Sdn Bhd had closed its financials last month and will be submitting to the Government evidence of its financial capability to start work. As we have already imputed the job wins in our forecast, we maintain our earnings’ numbers. Maintain BUY. We maintain our BUY recommendation on IJM Corp although its price has risen recently and the potential upside is 15% over the next 12 months. Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been assigned due to positive newsflow. Total return is expected to be between -15% and +15% over the next 12 months. Total return is expected, by -15% or more, over the next 12 months. Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been assigned due to negative newsflow.
SECTOR RECOMMENDATIONS POSITIVE
The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL
The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE
The sector is expected to underperform the overall market over the next 12 months.
