CGS-CIMB Research said IJM is expected to win RM2.9bil of contracts in the nine months of its financial year 2024.
PETALING JAYA: Construction and engineering group IJM Corp Bhd
is in a good position to leverage its strong balance sheet for more strategic acquisitions despite the downside risk of higher raw material costs.
CGS-CIMB Research said, based on its forecasts, IJM is expected to win RM2.9bil of contracts in the nine months of its financial year 2024 (FY24) versus RM0.5bil-RM1.7bil in FY20-FY23, bringing its order book to RM6.5bil as of September 2023.
The research house said new contract wins may come from the North Pantai Expressway (NPE) extension worth about RM1bil, industrial warehouses and data centres leveraging on its Industrial Building Systems plant in Bestari Jaya, Selangor.
“We think its strong balance sheet with net gearing of 27% as of September 2023 will be handy to fund the equity portions of internal projects like the NPE and Kuantan Port phase 2, and for buying strategic stakes in industrial projects apart from just being the contractor.
“IJM is also taking a 25% stake in the RM654mil Shah Alam International Logistics Hub, and expanding a new pile factory in Sarawak. In December last year, the group won a RM260mil contract for the Kuching Urban Transportation System project,” the research house noted.
The research house has retained its “add” call on IJM and a sum-of-parts derived target price of RM2.88 per share backed by a higher sustainable construction order book.
