IJM Corp proposed to acquire 50% stake in United Kingdom (UK)-based construction group JRL Group Holdings Ltd (JRL) for GBP50M (RM283m). This strategic investment is expected to strengthen IJM's core construction capabilities and support its further expansion into the UK market in our view. While we are positive on this development which could drive further growth in its UK operations, we keep our forecast unchanged for now, pending more clarify from management on the proposed investment. We maintain Outperform call on IJM with an unchanged TP of RM4.20.

• JRL is a diversified construction group (established in 1997) providing integrated solutions across in piling, groundworks, concrete frames, architectural design, and mechanical and electrical services. Since 2021, JRL has also ventured into property development, building a portfolio of seven sites featuring built-to-rent and co-living units, with an estimated gross development value (GDV) of GBP700m. Additionally, JRL's proven expertise in rail-adjacent and over-railway development would also support IJM's joint venture (JV) with Network Rail Property. This JV focuses on urban regeneration and mixed-use over-railway development across multiple strategic sites in London, with a combined GDV of over GBP3bn.
• Details on proposed Investment. The transaction involves subscription to 50% of the enlarged equity interest in JRL. This is expected to strengthen JRL's balance sheet, enhance liquidity for working capital and support future growth. The price is deemed fair, according to news report, at a P/E of 7.4x of an estimated PAT of GBP6.7m.
• Order book. JRL has a sizeable orderbook of GBP1.5bn, which will complement IJM's outstanding orderbook of RM6.3bn. Additionally, JRL provide access to a robust pipeline of projects. This will strengthen the Group's foothold and expend its exposure in the UK market.

Source: PublicInvest Research - 26 Nov 2024