PETALING JAYA: RHB Research believes that IJM Corp Bhd
should be able to leverage the data centre boom in Johor with the state being expected to host 60% of Malaysia’s capacity by 2030.
“This is to be facilitated by IJM’s expertise in the industrialised building system, evidenced by past projects such as semiconductor facilities in Penang, which deployed the precast bubble deck slab system that helps to speed up construction time and reduces waste,” the research house said.
The research house added that IJM is steadily catching up with other data centre builder such as Sunway Construction Group Bhd.
It pointed out that IJM has already four clinched data centre jobs in Johor worth RM2.3bil with its total domestic order book reaching around RM9.2bil, almost matching the RM9.4bil seen in 2018.
The research house said IJM’s solid order book would provide steady earnings visibility over the next three years.
It has maintained a “buy” call on the counter with a target price of RM3.73, with a 29% upside and 3% yield for its financial year 2026 (FY26).
“We expect IJM’s 1Q26 results, scheduled for release this week, to range between RM105mil and RM120mil (up between 8% and 23% year-on-year), mainly backed by the progress of construction projects that have reached the high end of the S-curve,” RHB Research explained.
It said there are several catalysts including a housing project for civil servants in Indonesia and potential new data centre contracts in the Klang Valley.
The research house said it believes the stock is undervalued, at just 18.9 times its FY26 price-earnings compared with key peers’ 20 times or more.
In addition, RHB Research said that industrial projects are likely to support the construction arm.
Based on its checks on Aug 11, the research house pointed out that IJM had reached meaningful progress on two warehouses worth RM1.2bil in Shah Alam.
This may lead to higher billings for 1Q26, if the projects are completed by first half of next year.
“Shah Alam’s proximity to the Kuala Lumpur International Airport and Port Klang makes the area a strategic spot for logistic hubs, with major shipping line Maersk having a 2.1 million square foot warehouse in Section 26, Shah Alam,” the research house said.
Most importantly, the research house pointed out that IJM is not the builder that has been issued with a stopwork order in Johor for a data centre project in Iskandar Puteri, as it believes IJM upholds strong building standards.
Meanwhile, another project, the Iskandar Puteri Data Centre (IPDC) for Telekom Malaysia Bhd also recently had its topping out ceremony in July, achieving a meaningful point of completion in terms of progress.
“In our view, the IPDC project has likely reached completion of between 60% and 80%. The latest RM1.4bil job involving the proposed construction of a data centre consisting of a six- storey building in Pulai, Johor Baru district is strong testament of IJM’s building capabilities for industrial buildings,” it added.
The research house made no change to its earnings estimate pointing out key downside risk to be failure to secure contracts in a timely manner.
