Stripping out exceptional items amounting to RM12.1m, IJM Corp reported an improvement in its 3QFY22 results with core net profit surging >100% QoQ to RM86.3m though slightly lower YoY at 10.6% which is understandable in absence of contributions from the plantation division. Cumulatively, the Group’s 9MFY22 core net profit stands at RM127.1m, though down slightly from 9MFY21 core net profit of RM130.2m. This accounts for 70.7% and 65.7% of our and consensus full year forecasts respectively, deeming it a miss. Overall performance is considered impressive nonetheless with the pickup in overall earnings seen this quarter even without plantation-based contributions, suggesting that recoveries are in place across all business segments. We upgrade our call to Outperform given an upside potential of 25.5% with an unchanged SOP TP of RM1.92. We believe IJM will be the beneficiary for the main package of MRT 3 project which slated to be awarded this year.

• Improved 3QFY22 earnings. The group’s 3QFY22 revenue improved by 17.9% QoQ to RM1.3bn, contributed mostly by the property, infrastructure and construction segments with top line growing 138.8%, 30.8%, and 20.3% respectively. Performance is mainly attributed to higher workforce capacity at workplaces. Overall, the group reported core net profit of RM86.3m in 3QFY22 as compared to a core net loss of RM8m in 2QFY22. Performance for the quarter is considered impressive with the pick-up in earnings even without plantation segment contribution.

• Earnings outlook. We foresee improving earnings moving forward with an absence of movement restrictions, leading to higher capacity at workplace and traffic volume for its highways as well as relaxation of COVID-19 SOPs. Construction segment is also expected to improve though on a gradual pace. The Group’s outstanding construction orderbook remains healthy and stands at RM4.2bn, inclusive of YTD wins of RM1.3bn. Management is targeting to secure an additional RM2bn into its orderbook, with more infrastructure-related projects to come. Meanwhile, the property segment’s earnings will be supported by unbilled sales of RM1.4bn. YTD, the Group has achieved RM2.1bn of new sales, exceeding FY21’s record and its internal target of RM1.7bn. Orderbook for the industry division at 1.65m tonnes has also exceeded FY21’s record of 1.34m tonnes, which is equivalent to 7 months’ worth of sales.

Source: PublicInvest Research - 25 Feb 2022