IJM bagged a job worth RM653.6m from Global Vision Logistic SB (GVL), marking its first job win in FY24. GVL is an associate company of Swift Haulage (42.5%), Aspen Group (12.5%) and 2 private entities (45%). IJM is appointed to build Phase 1A of Shah Alam International Logistic Hub involving a 4-storey logistic hub, 4- storey multilevel parking with 1-storey office and ancillary buildings. Including this job, the Group’s year-to-date new job win makes up 21.8% out of our FY24 orderbook replenishment assumption of RM3bn. Thus, we are leaving our forecasts unchanged for now. Nonetheless, the job is expected to contribute c. 4% per annum on average to the Group’s earnings during the estimated construction period of 26 months, assuming a high-single-digit margin. We maintain our Outperform call and SOTP derived TP of RM2.10, pegged at 15x PER sector average.

• Scope of work. The Group is appointed to design, construct and complete including testing and commissioning for Phase 1A consists of 4- storey logistic hub, 4-storey multilevel parking with 1-storey office and ancillary buildings at Persiaran Selangor, Seksyen 16, Shah Alam, Selangor. Construction works will begin in 1QFY24 and is expected to be completed by 1QFY26.

• Orderbook rose by 14.5%. The Group’s unbilled orderbook rose by 14.5% to RM5.2bn, providing earnings visibility for the next 4 years based on FY23 construction revenue of RM1.1bn. Assuming a high-single-digit profit margin, the job is expected to contribute RM14.4m annually on average in net profit based on certain levels of work completion each year. We make no adjustment to our earnings estimates however, considering this as part of our orderbook replenishment assumption of RM3bn, in line with the management’s job replenishment target.

• Shah Alam International Logistic Hub. The development consists of 3 blocks of 4 storey warehouses with offices, 1 block 7 storey offices and carparks and 1 block of 4 storey carparks, inclusive of environmental and sustainable features and facilities. It is strategically located in Shah Alam Industrial Estate with a total gross floor area of 550,000 sqm.

• Our view. We are enthused on this development as the job win from GVL corroborates IJM’s capability in industrial building construction. Previously in 2QFY23, IJM has bagged a similar industrial job worth RM341.1m from a renowned E&E player. We believe there is more job wins on the pipeline in view of higher construction activities going into FY24.

Source: PublicInvest Research - 27 Jun 2023