PETALING JAYA: After dragging its feet on asset unlocking, IJM Corp Bhd
is now fast-tracking the exercise following Sunway Bhd’s failed takeover move, although Kenanga Research expects the process to take three years to complete.
After a meeting with IJM’s management recently, Kenanga Research said the conglomerate has established a board-level committee to oversee a three-year asset-unlocking exercise.
At the management level, IJM is working towards value creation alongside efficiency improvement.
“Management expects to decide within the next two months the final framework for a pure construction listing, which would carry a 12-month timeline.”
Meanwhile, its strategic exit from India involves a two-year window to optimise disposal gains.
“With book value already reflecting market levels, we expect the divestment to be realised profitably without the risk of heavy impairments.
“The plan for a potential listing or business trust of local toll assets (excluding WCE Holdings Bhd) may take longer, as it requires authority approval regarding concession ownership,” the research house said in a note.
A fund manager told StarBiz the process may take longer as the business environment remains fluid.
“Regardless, as long as shareholders are convinced the management is committed to delivering what they promised, it should not be an issue.”
With the changes taking place within IJM, Kenanga Research foresees IJM to have a stronger showing in financial year 2027 (FY27), after a “lacklustre” FY26.
IJM’s financial year ends on March 31. It has yet to announce FY26 numbers.
Th eexpected stronger performance will be driven by recovering property earnings and aggressive execution of two major data centre projects.
With clear catalysts from its construction and toll operations’ listings and India exit, the group is well-positioned to enhance shareholder returns, it added.
“While FY27 details are not yet finalised, IJM has already secured RM6.5bil in job wins year-to-date, hitting its FY26 replenishment target of RM6bil to RM8bil.
“Furthermore, this is supported by multiple large-scale opportunities, including data centre jobs and two semiconductor projects.
“The timeline for the Penang LRT Mutiara Line (Package 2) is likely by mid-year, while the RM1bil Nusantara civil servant housing project is expected by year-end,” stated Kenanga Research.
The research house noted that IJM’s property unit registered a pre-tax loss of RM7.6mil in the first nine months of FY26 (9M26), dragged by higher operating costs in the United Kingdom and foreign-exchange effects, while the Malaysian unit saw weak sales.
However, property earnings are expected to improve in FY27.
Construction earnings should also see a strong year in FY27, as the aggressive S-curve progress for two major data centre projects (RM1.4bil in Pulai and RM1.26bil core and shell contract for Pearl Computing in Elmina) falls within the financial year.
“Management echoed the views of other builders we have checked, as the war-induced rise in input costs has had a bearable impact on margins thus far.
“However, should the conflict persist for another three months, margins will likely compress further.
“Government projects remain shielded due to variation of price clauses, similar to cost-plus contracts, but fixed lump-sum contracts remain at risk if the war is prolonged,” it said.
Kenanga Research has maintained its “outperform” rating on IJM, with a target price of RM3.40.
At press time, the stock traded at RM2.31 per share.
“We like IJM as it is poised to garner a slice of action in the Penang light rail transit (LRT) Mutiara Line, given its involvement in the previous LRT projects, and its strong earnings visibility is underpinned by an outstanding construction order book of RM9.1bil for Malaysia and new property sales of RM1.2bil in 9M26.
“We also like IJM as its Kuantan Port is the largest port on the East Coast, capturing export and import activities growth, and the potential divestment of its toll road to lighten its balance sheet and recycle capital could act as a re-rating catalyst.”
