The group’s balance sheet remains strong to take on mega infrastructure projects that may come with private finance initiative or public–private partnership requirements, says MIDF Research.
PETALING JAYA: IJM Corp Bhd
’s earnings prospects appear healthy, as the conglomerate remains well-positioned to ride the potential wave of infrastructure project rollouts in Malaysia.
With a net cash position estimated at about RM600.5mil, the group’s balance sheet remains strong to take on mega infrastructure projects that may come with private finance initiative or public–private partnership requirements, MIDF Research noted.
“We expect IJM to be among the front-runners for the upcoming Mass Rapid Transit 3 (MRT3) contracts.
“The group is also able to effectively manage its building material costs and labour supply constraints,” said MIDF Research.
“We also like that it has the pricing power for its quarrying and mining segment, and the strong demand it is enjoying,” it said in its report.
MIDF Research maintained its “buy” call on IJM, with a lower target price of RM1.93, compared with RM2.13 previously.
MIDF Research also noted that IJM’s core net profit of RM102.3mil for the first half of the financial year ending March 31, 2023 (FY23) was below the brokerage’s and consensus expectations, accounting for only 26.7% and 31.7% of the respective of full-year estimates.
Hong Leong Investment Bank (HLIB) Research also maintained a “buy” call on IJM. It cut its target price for the counter to RM1.88 from RM1.91 previously.
HLIB Research noted that IJM was inching closer to its RM3bil construction-contract win target for FY23, with the impending toll restructuring expected to yield construction opportunities in excess of RM1bil.
“This is pending the signing of a supplemental agreement with the government. However, we do note this will be done with a different government post-GE15,” HLIB Research said.
“IJM has also submitted bids for all civil packages of MRT3 and is working on participating in the systems package.
“Other projects in the pipeline could include the East Coast Rail Link, highways in India and building jobs,” added HLIB Research.
IJM currently has RM4.8bil in outstanding construction orders.
