PETALING JAYA: Shareholders of construction and property outfit IJM Corp Bhd
should hold on to their shares and reject the offer made by Sunway Bhd as the recent slump in the former’s share price has widened the arbitrage gap from the time the deal was tabled, according to Kenanga Research.
Sunway had made the offer to buy all of IJM at RM3.15 a share in a cash-and-share deal that valued the company at RM11bil on Jan 12.
IJM confirmed on Jan 19 that the company was under investigation by the Malaysian Anti-Corruption Commission (MACC) and the Inland Revenue Board over alleged money laundering.
Kenanga Research advised shareholders to continue rejecting Sunway’s offer, while the current share price, which has been volatile following the MACC news, has widened the arbitrage gap to 19% versus the RM3.15 offer price and a 29% discount over the target price (TP) of RM3.40.
“Based on our Sunway TP of RM4.73, the implied value of the offer for IJM of RM2.69 is nevertheless now slightly higher than IJM’s traded share price RM2.64, after IJM’s share price decline,” it said, adding that there continue to be more value to holding on to IJM shares.
Maintaining its “outperform” call on IJM, the research house said Sunway’s decision to continue with the takeover offer despite the MACC news underscores that the deal remained value-enhancing from Sunway’s perspective.
The research house maintained IJM’s earnings forecast for the financial year ending March 31, 2026 (FY26) and FY27, assuming contracts of RM5bil for each of the financial periods.
“IJM targets RM6bil to RM8bil in order book replenishment for FY26, underpinned by multiple large-scale opportunities including three data centre jobs, two industrial projects, and the more than RM1bil Nusantara civil servant housing project,” it said.
“Management expects to secure another hyperscaler data centre contract by end-FY26.
“Other key prospects include the Penang light rail transit Mutiara Line (package two), Menara 118’s block, Penang Airport expansion, and road projects in Sarawak,” it added.
