INVESTMENT HIGHLIGHTS

• IJM’s 12MFY19 net profit came in at 123% and 107% % of our and consensus expectations

• Construction reported lower revenue (-14.9%yoy) in FY19 on the back of slower billings

• Property segment was seen faring better, reporting revenue of RM1.4b (+20.8%yoy) in FY19

• We increased our earnings estimate for FY20, and introduce our FY21 forecast

• Maintain NEUTRAL with an adjusted TP of RM2.00

Above expectations. IJM’s 12MFY19 net profit came in at 123% and 106% of our and consensus expectations respectively. Albeit lower revenue at -5.2%yoy, the net PATAMI came in +20.8%yoy higher to RM418.9m. Stripping out the losses accrued from forex, stake disposal of Swarna Tollway, and write-back of profits (from toll concession in Argentina), the bottom-line figure registered higher at RM420.1m.

Construction reported lower revenue (-14.9%yoy) in FY19 on the back of slower billings, as newly secured projects are still in the early stages. Accordingly, pre-tax profit seen declining by -21.2%yoy during the year to RM174.3m. On quarterly basis, 4QFY19 pre-tax profit was higher by +48.6%yoy at RM61.9m due to improvement in construction margin, driven by the increased contribution from jointly controlled entities.

Property segment fared better, reporting revenue of RM1.4b (+20.8%yoy) in FY19. We noted that the higher sales recorded and better work progress as well as disposal exercise of land parcels were factors which have steered the growth. Moving forward, new property launches including Bandar Rimbayu, Shah Alam and Rimbun Alam, Seremban 2 are expected to underpin sales.

Infrastructure revenue increased +12.3%yoy to RM732.2m, with improvement seen in all sub-segments namely Malaysian tollways, port and overseas infra. By extension, growth was largely driven by the overseas segment, derived from toll concession investment in Argentina. Comparatively, share of contribution from overseas infra was starkly larger at 21.7% in FY19 (vs a minute 2.3% in FY18).

Source: MIDF Research - 30 May 2019