Wins a Data Centre Building Contract Worth RM331.7mn

IJM has secured a RM331.7mn contract from TM Technology Services Sdn Bhd, a subsidiary of Telekom Malaysia Bhd, for the design and construction of Block 2 at the Iskandar Puteri Data Centre in Johor. The job scope includes the foundation, sub-structure, super-structure, building works, mechanical and electrical services, fit-out works, as well as the testing and commissioning of the data centre.

The data centre aims to achieve Uptime Institute Tier III certification, which is the international standard for data centre performance. This certificate underscores the data centre’s capability for maintenance without downtime, owning to its redundant systems.

The construction will commence in July 2024 and is expected to be completed by 3QCY25.

Our View

We are optimistic about this new contract win, as it marks IJM's initial foray into the robust advanced technology facility sector. This contract is the third job secured by IJM in FY25, bringing the total YTD new job wins to RM1.3bn. As a result, the group’s outstanding order book has increased to RM7.3bn, equivalent to 4.4x FY24 construction revenue.

Assuming a PBT margin of 8.0%, we estimate this project will contribute total net earnings of RM20.2mn throughout the construction period.

Forecast

No change to our FY25-27 earnings forecasts, as the new job win falls within our new job replenishment assumption of RM2.6bn for the year.

Valuation

We maintain our target price of RM3.59 based on unchanged 1.2x CY25 P/B. Maintain Buy on the stock.

Source: TA Research - 27 Jun 2024