KUALA LUMPUR: Maybank Investment Bank Research continues to have a Buy call on infrastructure-property-plantation group IJM Corp with a higher target price of RM1.98 which is 26% higher than the earlier TP of RM1.58.
It said on Thursday IJM’s 2QFY21 net profit shows recovery in all operations after being impacted by the Movement Control Order in its first quarter April to June.
The 2Q net profit included substantial unrealised forex loss at the plantation operations.
Excluding one-offs, it estimated a core net profit of RM113mil in 2Q, bringing 1H to RM66mil vs. its FY21E of RM235mil; the outperformance coming from the infrastructure and construction ops.
“We maintain our core earnings forecasts for now, but raise TP to MYR1.98 as we remove our discount (20%) to RNAV estimates on an improved outlook.
“All ops posted sequential rebound IJM’s 2Q/1HFY21 headline net profit included substantial unrealised forex loss/gain.
“Of the RM25mil forex loss in 2Q/ RM66mil gain in 1H, plantation ops contributed RM35mil forex loss in 2Q/ RM57mil gain in 1H, due to its US$/yen borrowings.
“Ex- one-offs, all operations posted higher QoQ profit in 2Q; the weakest recovery however was in its industry ops, as deliveries of piles, aggregates and ready-mixed concrete remained slow as overall construction activities have yet to pick up fully, ” it said.
Maybank Research pointed out that Kuantan Port (under infrastructure operations) saw a 20% YoY rise in throughput in 2Q, potentially surpassing its internal target of 28 million tonnes for FY21 if 2Q’s volume level sustain.
In CY20 year-to-date, IJM has clinched RM2bil new construction jobs, meeting its RM2bil target for CY20 and lifting its outstanding orderbook to RM5.4bil. Management hopes to replicate CY20’s RM2bil job win in CY21.
At its property operations, new sales picked up in 2QFY21 (RM400mil), bringing 1H to RM720mil, and closing in to its RM800mil to RM1bil sales target for FY21. Unbilled property sales were RM1.2bil as of end-September 2020.
However, the reimposition of the conditional CMCO since Oct 14 has impacted traffic volume at its tolled highways which have been down by 30%-50%.
Meanwhile, its other ops have been minimally affected. IJM’s assets are strategic; standouts are its property landbank, NPE, BESRAYA and Kuantan Port. At just 0.6 times price to book, there is still value despite its share price outperformance of late, it said.
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