- We maintain BUY on IJM Corp, and raise our fair from RM6.75/share to RM7.10/share (an unchanged 10% discount to its NAV) as we roll-forward our valuation base to FY15. Stripping off one-off items, IJM’s FY14 core net profit (+42% YoY) was well within range. Turnover rose by 29% YoY on the back of stronger billings for its property, construction and port divisions.

- Construction earnings rose by 46% YoY to RM168mil following the completion of several sizeable projects in 4QFY14. Construction margins rose to 9.3% in FY14 from 7.4% in FY13. Similarly, property billings benefited from higher work progress (+61% YoY) at key projects including The Lights and Bandar Rimbayu.

- Revenue for the infrastructure division (+26% YoY) was largely driven by higher throughput at Kuantan Port and steady traffic growth from its Besraya and NPE toll concessions.

- The plantation division was dragged down by start cost for its Indonesian estates and lower average CPO selling prices realised (-9% YoY at RM2,385/tonne).

- IJM’s contract momentum is rising; it was recently appointed as turnkey/procurement contractor for the West Coast Expressway (WCE) just last week.

- In addition, IJM secured several packages worth RM2.8bil for the WCE and is poised to be in the running for another RM2.2bil that will be put up for tender. For the financial year-to-date, IJM has clinched new contract wins amounting to ~RM3.2bil.

- IJM Land is looking to launch ~RM3bil worth of new properties for FY15F (~RM3bil). This would be anchored by key projects such as The Lights Phase II, Bandar Rimbayu and Pantai Sentral Park.

- IJM declared a special DPS of 10 sen on top of a second interim DPS (single-tier) of 11 sen. This took FY14 DPS to 25 sen or a yield of close to 4%. Notably, IJM has disposed its stakes in Trichy Highway and Kemaman Port during the last FY.

- We envisage some NAV upside from:- (i) the Kuantan Port expansion; and (ii) WCE concessions. Likewise, the proposed acquisition of SILK highway for ~RM400mil could enhance the connectivity within IJM’s existing toll highways (i.e. Besraya, NPE and LEKAS).

- SILK is strategically located within the growing South Klang Valley corridor. Its concession expires in 2037.  

Source: AmeSecurities