Wins Two Contracts Worth RM561mn

IJM secured two new contracts, which entail the following details:

Notably, WHM, a subsidiary of Woh Hup Pte Ltd, is one of Singapore's oldest and largest privately-owned construction firms. Since securing its first data centre project in 2016, Woh Hup has successfully completed six data centres across India, Indonesia, and Singapore for global developers.

Our View

We view the recent project wins positively, as they strengthen IJM's position in the fast-growing advanced technology facility sector. By leveraging advanced construction methods and pretensioned high-strength concrete spun piles, IJM can shorten delivery lead times and increase efficiency through in-house technologies. With these being the fourth and fifth contracts secured in FY25, the total year-to-date job wins have reached RM1.9bn. As a result, the group's outstanding order book has grown to RM7.9bn, equivalent to 4.8x FY24 construction revenue.

Assuming a PBT margin of 8.0%, we estimate that these projects will collectively contribute a net profit of RM34.1mn throughout the construction period.

Forecast

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

Valuation

We reiterate our target price of RM4.00 based on unchanged 1.3x CY25 P/B and 3% ESG premium given our 4-star rating. Maintain Buy on the stock.

Source: TA Research - 20 Aug 2024