Investment Highlights

• We raise our FY19-20F net profit forecasts by 3% each, increase our SOP-based FV by 2% to RM3.54 (Exhibit 1) (from RM3.46) and maintain our BUY call, following the award by Prasarana to IJM of the underground package of LRT3 for RM1.1bil.

• According to LRT3’s official website, the 2km underground segment begins at Seksyen 13, Shah Alam, stretches along Persiaran Hishamuddin and Persiaran Dato’ Menteri, and resurfaces at the Pejabat Pos Besar Shah Alam area.

• The latest contract has boosted IJM’s YTD (FY Mar 2018) job wins to RM4.0bil and its outstanding construction order book to RM10.4bil.

• This has exceeded our assumption for job wins in FY18F of RM3bil. As such, we raise our assumption to RM4bil, resulting in the upgrade in earnings and FV. We are keeping our assumption of RM3bil job wins annually in FY19-20F, which is consistent with IJM's more “normalised” annual job wins.

• We are positive on the latest development. We like IJM Corp as it is a good proxy to the booming local construction sector given its involvement in key infrastructure projects such as the West Coast Expressway, MRT2, LRT3 and Kuantan Port Deepwater Terminal. Also, IJM is poised to garner a slice of action in the East Coast Rail Link and KL-Singapore high-speed rail, based on its forte and track record in rail projects (Seremban-Gemas double tracking, Delhi Metro, MRT1).

• IJM’s diverse business interests, spanning a wide range of sectors that also include property, plantation, building materials, toll roads and ports, should help counter sector specific cyclical downturns, resulting in better earnings stability over the long term.

Source: AmInvest Research - 14 Mar 2018