IJM Corp Bhd maintains an enviable profit record: consistently in the black since its inception in 1983. Managed by professionals – but none with significant stakes in the company – IJM quickly built up its reputation soon after listing on the KLSE main board in 1986.
Those familiar with IJM say the company had blue-chip quality from the word go.
Outstanding share capital has grown to RM364mil from RM175mil in December 1992. IJM's current market capitalisation is about RM1.75bil. The last time IJM called on investors to put more in the company was about 10 years ago.
However, for the better part of the 1990s, the stock remained in the shadow of higher profile construction firms like United Engineers (M) Bhd and Gamuda Bhd.
While IJM is diversified – it has plantations, building materials, and property divisions to complement its core construction business – the company lacks lucrative domestic concession contracts. That seems to be IJM's weakest link in its otherwise impressive income portfolio.
In the early 1990s, abundant jobs at home gave companies little reason to venture overseas. Domestic projects were already over-stretching the resources of some of these fast-growing companies.
For IJM it was the opposite: it was able to secure local contracts but construction order book needed constant replenishing. Seeking steadier longer-term income stream, IJM ventured overseas.
On foreign land, the company thrived, and during the crisis years (1997–98), overseas operations cushioned the impact of the slowdown at home.
At the time, IJM was already in China and Argentina, building highways and securing rights to collect toll in the two countries. In Vietnam, the group invested in water concession. Apart from these, construction contracts took the company to Singapore, Hong Kong, Australia, Britain, the US, Chile and elsewhere.
The company has since been concentrating more on India, where it gained significant foothold. Today, IJM is one of the leading foreign contractors operating in the sub-continent.
The overseas expansion provided IJM geographic diversity. To add further depth to its earning base, the group ventured into building materials manufacturing and property – all of which are related to its core construction business.
However, it was palm oil that buffered IJM's bottom line when the crisis hit.
The division will have a separate listing via a reverse takeover of Rahman Hydraulics Bhd by the end of March this year. To facilitate the exercise, IJM is offering two free IJM Plantations Bhd shares for every five IJM shares.
The listing would add further value for IJM shareholders, who have benefited over the last 13 years from the management's admirable business sense.
One lot in 1990 would have cost an investor RM3,940 based on its Jan 2 closing price of RM3.94. In the same year, IJM made a one-for-three rights issue, costing an additional RM632.7 for the extra 333 new shares.
In 1995, a one-for-one bonus issue would have doubled the shareholding to 2,666 shares. In 2000, IJM offered warrants on the basis of one-for-five, priced at 30.3 sen each.
Over the 13-year period, the investment has grossed RM12,580 in capital gains and dividends.