KUALA LUMPUR: Kenanga Research has maintained its Market Perform rating on IJM Corp Bhd
with a target price of RM3.48 following news that the latter has secured a RM392mil construction job from HSBC.
The construction of an office building for HSCBC in Jalan Tun Razak spans over 37.5 months with delivery expected in December 2020.
IJM's outstanding order book currently stands at about RM9.1bil while its property unbilled sales stands at RM1.7bil with a visibility for the next three to four years.
"We continue to maintain our FY18E order-book replenishment target of RM3bil (in line with management) as we believe that the local job prospects remain positive, underpinned by contracts from Pan Borneo Sabah, Kuantan Port infra works, building jobs from the private sector, and also ECRL," said Kenanga Research.
It added that it is Neutral on the contract award replenishment of RM392mil as it is well within its FY18E construction order-book replenishment target of RM3bil.
"To date, its order-book replenishment of RM842.9mil makes up 28% of our target with a remainder of RM2.2bil to be achieved for FY18. Assuming pre-tax margins of 10%, the contract is expected to contribute RM9.4mil to its bottom-line per annum," it said.
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