KUALA LUMPUR: Maybank Investment Bank Research is retaining its hold recommendation for IJM Corporation with an unchnaged realised net asset value (RNAV) target price of RM2.10.
It said on Thursday the infrastructure-property-plantation group'sFY19 core net profit came in slightly below its FY19 forecast, with the shortfall due to weaker-than-expected contribution from construction.
“Our FY20E/FY21E earnings are relatively unchanged after updating for Kuantan Port’s FY19 throughput figures and adjusting for construction works recognition. We also introduce our FY22E earnings,” it said.
Maybank Research said IJM’s 4QFY19 core net profit of RM92m (+233% YoY, +32% QoQ) brought FY19 core net profit to RM395m (+5% YoY), meeting 96%/98% of its/ consensus full-year forecasts.
“Our core net profit calculation for FY19 excludes loss on asset disposal (RM21m), fair value loss (RM26m), unrealised forex loss (RM41m) and one-off gain from the recovery of its Argentinian highway earnings (RM112m).
“FY19 profit’s slight shortfall against our forecast was due to slower construction works recognition (-15% YoY) as projects have yet to reach their optimal construction phase,” it said.
Property reported a strong profit before tax of RM202m in FY19 (+67% YoY), supported by i) higher sales and progress billings and ii) gains from disposal of commercial land (e.RM20m land sales gain in FY19). As a result, margin also improved by 3.9ppts YoY in FY19.
Infrastructure PBT also increased by 118% YoY from throughput recovery at Kuantan Port (+20% YoY) and stronger contribution from the tollways in Malaysia and Argentina.
There was also a one-off adjustment for recovery of earnings for its Argentinian highway of RM111.8m in 4QFY19.
“Our FY20E/FY21E earnings are relatively unchanged after i) updating our Kuantan Port throughput figures for FY19; ii) adjusting our construction works recognition. FY20E earnings growth will be supported by the construction and infrastructure divisions. We continue to forecast losses for plantation,” it said.
