INVESTMENT HIGHLIGHTS

• Results below expectations

• Infrastructure results back-paddled

• Maintain our estimates for FYE18/FYE19

• Altogether, we reiterate our BUY stance with TP of RM4.00 per share

Results below expectations. IJM’s 9M18 earnings of RM338.6m (- 28%YoY) came in below ours and consensus estimates. Its net profit accounted for 68.5% and 62.7% of ours and consensus’ full-year forecasts respectively. The deviations for estimates are influenced by lower contribution from plantation and industry segments

Plantation and industrial segment’s results back-paddled. The results was due to PBT marginal compression from plantations and industrial segments which decreased from RM131.5m in 9M17 to RM75.4m in 9M17 (-43% YoY) and RM105.7m to RM69.1m (-35.0%YoY) respectively. For plantation, higher plantation maintenance and overhead cost was higher due to the start of the second mill. Furthermore, sluggish orders for building materials for IJM’s industrial segment are due to the gap of project commencements.

Impact on earnings. Despite the unfavourable milieu, IJM’s orderbook stands at RM9.3bn with further ample financial headroom to clinch more projects. Thus, we maintain our forecast on the basis of its sturdy orderbook.

Positive prospect. Consequently, in upcoming quarters we are expecting positive newsflows from East Coast Railway Link and High Speed Railway projects which is catalytic to IJM’s earnings.

Maintain BUY. We reaffirm our BUY recommendation with an unchanged SOP-based TP of RM4.00 per share.

Source: MIDF Research - 28 Feb 2018