IJM announced that its wholly-owned subsidiary, IJM Construction had on 9 Dec14  accepted  two  letters  of  award  from  Sime  Darby  Sunrise Development  for  the  execution  and  completion  of  superstructure, infrastructure and landscaping works for the proposed mixed development known as “RADIA” at Bukit Jelutong. The works comprises of commercial complexes,  service  apartments  and  facilities  as  well  as  podium  and basement  car  parks.  Phase  1  and  Phase  2  have  a  contract  sum  of RM263.0m and will be completed in 26 months from 15 Dec14 while Phase 3 and Phase 4 have a contract sum of RM172.4m and will be completed in 26 months from 15 Jun15. (Source: Bursa Malaysia)

Comment:  The  two  contracts  add  to  IJM’s  outstanding  construction  order book of approximately RM2.3bn. We expect contracts from the West Coast Expressway and Kuantan Port expansion projects to further enhance billing visibility, which would amount to RM1.8bn-RM2.0bn per annum. Based on a pretax margin of 7% for building jobs, the two contracts are expected to generate a total PAT of approximately RM23m over FY16E-18E. We  maintain  our  FY15E-17E  forecasts,  target  price  of  RM7.86  and  BUY rating for IJM.

Source: Affin Hwang Capital Research - 10 Dec 2014