• IJM Corporation (IJM) has secured 2 contracts in Penang worth RM422mil. The contracts comprise:-
  (i) RM341mil for the construction of a new chip assembly and testing facility – 2 buildings with built-up area of 982k sq ft – in Penang’s Bayan Lepas Free Industrial Zone from ASE Electronics (M).
  The construction of the manufacturing facility will be carried out over 2 phases, from Nov 2022 to 2025. We estimate PBT of RM27mil from this project over the span of 3 years.
  (ii) RM81mil for the construction of a 45-storey Maritime Signature commercial tower located at Karpal Singh Drive in Georgetown from Bionic Development.
  The construction is scheduled to commence in Dec 2022, for a period of 42 months, until Jun 2026. We project PBT of RM7mil from this job.

• Following these contract wins, IJM’s outstanding order book has grown 23% to RM4.8bil from RM3.9bil as at 30 Jun 2022. Nevertheless, our forecasts remain unchanged as YTD announced contract awards of RM1.1bil are within our FY23F order book replenishment assumptions of RM3bil. Further replenishments may be from Mass Rapid Transit 3, East Coast Rail Link, or toll road projects.

• IJM currently trades at 13.9x FY24F PE, which is near our benchmark for large-cap construction stocks. We maintain HOLD with SOP-based fair value of RM1.83/share.

Source: AmInvest Research - 24 Nov 2022