PETALING JAYA: With Sunway Bhd
’s RM11bil takeover off the table, IJM Corp Bhd is set to accelerate its asset monetisation while Sunway will continue to pursue other potential acquisitions.
The voluntary takeover offer (VTO), which closed with a 33.4% acceptance rate, fell short of the 50% plus one share threshold required for it to become unconditional.
As a result, the offer has lapsed and all tendered IJM shares will be returned to shareholders.
The outcome, while disappointing for some, was broadly within expectations given the lack of support from key institutional investors.
Analysts remained largely positive on the prospects of both companies.
According to Bloomberg data, IJM currently has 11 “buy” calls and four “hold” calls, with a 12-month consensus target price (TP) of RM3.27.
Sunway has five “buy” calls and eight “hold” calls, with a consensus TP of RM5.69.
With the deal now off the table, analysts say both IJM and Sunway are set to refocus on unlocking value through their respective standalone strategies.
UOB Kay Hian (UOBKH) Research said monetisation timelines are now key for IJM.
“Now that the acquisition has fallen through, IJM’s monetisation efforts have returned to the spotlight as the key rerating catalyst for the group,” it said, noting the company had previously guided a two-year timeline to capitalise its assets, including the potential listing of its 45.5%-owned subsidiary Hexacon Construction Pte Ltd, a main contractor based in Singapore.
MBSB Research echoed this, noting that IJM will move forward with executing its “value unlocking strategy.”
“IJM will focus on unlocking value internally, anchored by the potential listing of its associate, Hexacon Construction, which could reposition the group as a more focused pureplay construction proxy,” it said.
The research house added that the group is also advancing plans to monetise mature toll road assets, streamline its asset-heavy structure and exit its India business within the next two to three years.
“Overall, the rejection preserves shareholders’ exposure to IJM’s long-term asset monetisation pipeline, with value expected to be realised progressively.”
Hong Leong Investment Bank (HLIB) Research said the failed takeover may delay value crystallisation, but strategic shareholders are taking a longer-term view to capture greater upside.
“We view the takeover attempt as having created a strong sense of urgency for IJM’s management to expedite its value unlocking initiatives,” it said.
At present, HLIB Research estimates the construction segment to be worth about RM2bil under its sum-of-parts valuation, with scope for upside if earnings multiples converge closer to sector peers.
But, for a potential spin-off of the construction arm, HLIB Research noted that the group would need to demonstrate solid margin execution and increased data centre exposure.
Operationally, IJM continues to see healthy order book replenishment, particularly in the data centre segment.
MBSB Research noted that the group has secured about RM8.2bil in projects to date, with roughly half linked to data centres, which should support margins as legacy low-margin jobs near completion.
On April 1, IJM announced a RM658mil data centre contract from Sime Darby for phase two of a project in Elmina Business Park, Selangor, bringing total contract value for the development to over RM1.9bil.
Further job flows are expected from data centre projects in the Klang Valley and Johor, while the group may also secure a portion of major infrastructure works such as the Penang Mutiara light rail transit line package, according to MBSB Research.
For Sunway, analysts said the lapse of the takeover removed a key overhang and allowed investors to refocus on its core earnings drivers.
TA Research said the outcome was not surprising and viewed the conclusion of the takeover process as a positive development for the group.
“We believe Sunway’s standalone fundamentals remain intact despite the lapse of the VTO,” it said, adding that earnings growth would be supported by its property and construction segments.
UOB Kay Hian Research noted that uncertainty surrounding the deal had already been largely priced in, with Sunway’s share price declining about 22% since the announcement of the offer in January.
The research house upgraded the stock to “buy” with an unchanged target price of RM5.62, citing attractive valuations following the pullback.
Looking ahead, RHB Research said Sunway’s growth would continue to be underpinned by its core businesses, including construction, property and healthcare, as well as its recent acquisition of MCL Land in Singapore.
It added that while the takeover did not materialise, Sunway is likely to continue pursuing inorganic growth opportunities, supported by its balance sheet strength and appetite for strategic assets.
“Sunway’s offer to take over IJM does indicate its appetite to acquire any company that holds strategic assets worth RM11bil to RM12bil, and the group is able to fund with a cash pile of RM1.1bil to RM1.2bil,” it said.
“Apart from companies with valuable assets, acquisition opportunities may also be a land bank for development or investment properties.”
