PETALING JAYA: IJM Corp Bhd
is expected to extend its growth momentum in the construction sector, buoyed by a steady pipeline of data centre and infrastructure opportunities following its latest mechanical and electrical (M&E) fit-out contract win worth RM873.9mil for the Elmina hyperscale data centre in Selangor.
Analysts believe the latest development underscores IJM’s increasing foothold in the high-value data centre segment while providing strong order book visibility into the next financial year.
According to TA Research, the new contract came within its expectations, although the value was slightly below projections.
“The RM873.9mil M&E contract came in below our projected range of RM960mil to RM1.28bil, which was derived based on an assumed 80MW capacity, data centre construction cost of RM30mil to RM40mil per megawatt, and a 40% allocation for M&E works,” the research house said.
The research house added that with year-to-date contract wins of RM5.1bil, IJM has achieved about 85% of its job win target of RM6bil for the financial year ending March 31, 2026 (FY26).
“We believe IJM’s strong track record, integrated engineering and construction capabilities, and established relationships with leading hyperscale data centre operators continue to position it favourably to capture further opportunities within the ongoing robust data centre infrastructure investments in Malaysia,” it said.
TA Research maintained its “buy” call on IJM with a target price of RM3.46.
Hong Leong Investment Bank Research (HLIB Research) highlighted that the win lifted IJM’s order book to RM9.3bil, representing a 10% increase and a 3.7 times cover on FY25 construction revenue.
“This latest win takes IJM’s order book to a sizeable RM9.3bil, translating to 3.7 times cover on FY25 segmental revenue,” HLIB Research noted.
The research house expects profit-before-tax margins for data centre projects to trend towards the higher end of its 6% to 9% guidance, given the complexity and premium nature of such jobs.
“In our view, recent developments mark significant progress in penetrating top-of-the-range hyperscale clientele, potentially indicative of its chances for existing tenders as well as positioning IJM to contend for a planned one-gigawatt data centre campus build-out later on,” HLIB Research said.
The research house maintained its “buy” rating on IJM with a target price of RM3.50.
RHB Research shared a similarly positive outlook, observing that IJM’s strong execution capacity leaves room for additional project wins.
“We understand that IJM has submitted about four to six bids for data centre jobs across the Klang Valley and Johor this year,” it said.
“Therefore, we believe that IJM has the capacity to take on more data centre jobs, as it continues to work towards finishing earlier ones,” it added.
RHB Research maintained a “buy” call with a target price of RM3.62, adding that potential wins could include data centre contracts and the Nusantara civil servant housing project in Indonesia.
CGSI Research reiterated its “add” rating and RM3.61 target price, citing IJM’s robust construction franchise and synergistic spun concrete piles business.
“Other potential wins for FY26 are the Nusantara housing project, Penang LRT and airport, Sarawak road projects and other industrial buildings,” it said.
Meanwhile, Kenanga Research maintained its “outperform” call with a target price of RM3.40, pointing to IJM’s solid earnings visibility and strategic positioning for large projects.
“IJM targets RM6bil to RM8bil in order book replenishment for FY26, supported by several large-scale opportunities including a few data centre jobs of RM1bil each and the Nusantara civil servant housing project worth more than RM1bil,” it said.
