PETALING JAYA: IJM Corp Bhd
is set to maintain strong earnings visibility through financial year ending March 31, 2029 (FY29), supported by a sizeable order book and continued exposure to Malaysia’s data centre (DC) and industrial building boom.
The group’s planned standalone listing of its construction arm in the third quarter of FY27 (3Q27) could also sharpen the market’s valuation of the business.
Apex Research, in its initiation of coverage on the company, said IJM’s outstanding order book of RM14.5bil would keep the group busy well into FY29.
The order book-to-revenue coverage ratio of 2.1 times against FY26 construction revenue extends earnings visibility beyond the typical one to two-year window for most contractors.
“Relative to management’s FY27 new-order target of RM9bil (RM6bil Malaysia, RM3bil overseas), the group has already secured RM1.8bil in new wins year-to-date, keeping it on track to sustain order book growth into FY28,” the brokerage said.
Apex Research noted that IJM also has a tender book worth RM18bil, providing a pipeline for further order replenishment.
Its exposure to DCs and industrial buildings is another growth driver, with 55% of its Malaysian order book now linked to the segment.
IJM Land’s RM1.96bil joint venture with Minister of Finance (Inc) and Southern Catalyst Sdn Bhd to develop an industrial park in Sedenak further extends the group’s exposure to the industrial corridor.
Meanwhile, UK associate JRL, which is 50%-owned, and Singapore associate Hexacon, in which IJM holds a 45.5% stake, contribute a further RM5bil and RM2.2bil respectively to the order book.
Apex Research said these initiatives, alongside the planned standalone listing of IJM’s construction arm in 3Q27, should enhance earnings visibility and allow the construction business to be valued more independently.
Beyond construction, IJM’s Industry division provides an additional earnings differentiator.
The division has the group’s highest profit-before-tax margin at 16.8%, supported by in-house spun-pile manufacturing, which also makes IJM one of Malaysia’s largest external pile suppliers.
“This vertical integration captures margin peers pay away to third parties and insulates construction from input cost inflation,” Apex Research said.
The brokerage added that IJM’s proprietary “bubble deck” precast technology, used on RTS Link projects, provides another niche, with only one small competitor offering a comparable product.
Apex Research initiated coverage on IJM with a “buy” recommendation and a target price of RM3.48 a share.
The valuation is based on a sum-of-the-parts approach, including price-to-earnings multiples of 22 times FY27 core net profit for construction, 20 times for manufacturing and quarrying and 20 times for port, with the latter valued at 60% attributable.
It also incorporates discounted cash flow valuation for toll-way concessions, a 50% discount to revalued net asset value for property and market value for listed associate stakes.
