- We maintain our BUY call on IJM Corp with a revised fair value of RM4.10/share (previously: RM8.20/share) on an unchanged 10% discount to its NAV as we factor in its recently completed 1-for-1 bonus issue.

- Last Friday, IJM announced on Bursa Malaysia that its wholly-owned subsidiary IJM Construction Sdn Bhd has secured a letter of award from Hotel Equatorial (M) Sdn Bhd and Fenghuang Development Sdn Bhd.

- The award is for the main building works of a 52-storey mixed commercial development block named Equitorial Plaza along Jalan Sultan Ismail.

- The scope of works include the podium block, office tower and hotel tower as well as interior design works for the hotel tower and outlet.

- The contract value is worth RM455mil to be spread out over three years. We believe the contract relates to the redevelopment of the old Equitorial Hotel.

- More importantly, the latest award is further testament o IJM’s proven pedigree as a premium builder of highrise or Grade A buildings within Klang Valley.

- Some of the notable building jobs that IJM successfully completed within the KL city centre include the Grand Hyatt Hotel, The Troika, Menera Commerce and Renaissance Hotel/New World Hotel.

- We make no changes to our earnings estimates as the new job is within our new order book assumption for FY16F.

- Looking ahead, we remain upbeat on IJM’s construction prospects ahead of a new wave of infrastructure spending.

- IJM’s construction earnings should gain momentum in the coming quarters when works on the Kuantan Port expansion (Phase 1) and West Coast Expressway (WCE) begin.

- Apart from the balance of works for the WCE (~RM2.2bil), we expect IJM to be in the mix for several infrastructure projects in the offing.

- These include the Klang Valley MRT 2, LRT 3 and Gemas-JB double tracking project.

Source: AmeSecurities Research - 21 Sep 2015