• IJM Corporation (IJM) announced that it has secured 2 contracts in Selangor worth RM982mil from Ministry of Works (JKR) and Lembaga Hasil Dalam Negeri (LHDN) Malaysia. The contracts comprise :- 
  (i) RM831mil design-and-build turnkey construction contract for a new 312-bedded government hospital with specialist medical facilities in Kapar from JKR; and
  (ii) RM151mil contract for the construction of an 18-storey LHDN Malaysia office tower in Shah Alam from LHDN.
• The construction of the hospital will be carried out over 48 months from Nov 2022 until Nov 2026. The project is a 60:40 JV between IJM and Ganda Imbuhan, hence, IJM’s share of total PBT is estimated at RM47mil.
• Meanwhile the construction of the LHDN office tower is scheduled to commence from 1 Nov 2022, for a period of 36 months, until 31 Oct 2025. We project a total PBT of RM12mil from this job.

• Following the wins totaling RM982mil, IJM’s outstanding order book has grown by 17% to RM4.6bil, from RM3.9bil on 30 Jun 2022. Nevertheless, our forecasts remain unchanged as these awards are within our FY23F order book assumption of RM3bil. Further replenishment may come from the MRT3, the ECRL or toll road projects as the restructuring of toll ways is expected to include an extension of one of the highways.

• IJM currently trades at 14x FY24F PE, which is in line with our benchmark for large-cap construction stocks. We maintain HOLD with SOP-based fair value of RM1.83/share.

Source: AmInvest Research - 19 Oct 2022