Stellar earnings likely for IJM on new job wins

TA Research said IJM is targeting to bag RM5bil in new job wins in FY25.

PETALING JAYA: IJM Corp Bhd is anticipated to see strong earnings in its current financial year ending March 31, 2025 (FY25), underpinned by new job wins and the rollout of large-scale infrastructure projects.

TA Research in a report noted that IJM is targeting to bag RM5bil in new job wins for FY25, fuelled by the potential Nusantara civil servant housing job (worth RM1bil) and the New Pantai Expressway extension (RM1bil).

Additionally, the research house said the group can benefit from the rollout of large-scale infrastructure projects, specifically the Penang Light Rail Transit (LRT), Pan Borneo Sabah Phase 2 and a data centre job, totalling RM3bil in project value.

“Considering IJM is one of the front-runners for large-scale infrastructure projects, namely the Penang LRT, Nusantara civil servant housing project as well as Pan Borneo Sabah Phase 2, while also pursuing opportunities in the growing data centre industry, we raise the target price-to-book multiple from 0.85 times to 0.95 times.”

TA Research said this translated to an implied price-to-earnings ratio of 19 times calendar year 2025 earnings, in view of better earnings visibility that is backed by a solid outstanding order book.

“The group’s current outstanding construction order book is around RM6bil, translating to about 3.6 times FY24 construction revenue. Meanwhile, the property division is supported by unbilled sales of RM2.6bil.

“In FY24, IJM managed to secure RM3.7bil in new jobs against its RM4bil new order replenishment target,” it said.

For the fourth quarter ended March 31, 2024 (4Q24), IJM’s net profit jumped to RM305.52mil from RM23.05mil in the previous corresponding period, while revenue grew to RM1.76bil from RM1.33bil.

For FY24, IJM said net profit surged to RM600.28mil from RM158.28mil a year earlier, while revenue grew to RM5.92bil from RM4.57bil in the previous corresponding period.

Kenanga Research said it expects a significant revitalisation of the construction sector in 2024, backed by the rollout of the RM45bil Mass Rail Transit 3 project and six flood mitigation projects (reportedly worth RM13bil) and the vibrant private sector construction market.

The research house said the market will be underpinned by massive investments in new semiconductor foundries and data centres.

“We understand that IJM is also eyeing work packages from various projects in Sabah and Sarawak as well as Indonesia.

“We raise our FY25 to FY26 net profit forecasts by 5% and 9%, lifting our job win assumptions to RM5bil and RM4bil (from RM4.5bil and RM3.5bil), respectively.”

Meanwhile, RHB Investment Bank said it is tweaking IJM’s FY25 to FY26 earnings upwards by 22% to 24%, as it imputes higher contributions from the industrial and infrastructure arms, along with elevated job replenishment assumptions of RM5bil for FY25 (from RM3.5bil).

“We have also introduced FY27 earnings with a job target assumption of RM3bil,” it said.

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