IJM Corporation Bhd; Buy; RM5.80
Price Target: RM7.20; IJM MK

IJM has accepted the Letter of Award from JKG Tower Sdn Bhd for the proposed construction of two commercial blocks at Jalan Raja Laut, Kuala Lumpur for RM238.4m. The construction period is 26 months. It involves the building of 1 Block of 32-Storey Office Tower and 1 Block of 13-Storey Elevated Car Park.

This represents IJM’s first contract win for CY13 lifting current outstanding orderbook by 10% to RM2.7bn. While no margin guidance was given, we think it should be in the region of 5-8% (pretax), typical of building jobs. The contract win also forms 9% of our new order win assumption for FY14F.

The real catalyst for IJM remains the West Coast Expressway (WCE) where we expect an announcement of financial close very soon. We understand there is an automatic renewal of 3-months from the financial close date of 1 September 2013, implying an announcement before end November 2013. This project was mentioned in the recent Budget and with the conclusion of recent UMNO election; we also expect stronger contract flows for projects.

We maintain our BUY rating and SOP-derived TP of RM7.20 for IJM. It is our top pick for the sector. 

Source: HwangDBS Research - 1 Nov 2013