KUALA LUMPUR: IJM Corp Bhd’s earnings are expected to recover gradually this year supported by the full resumption of its businesses and more new job wins from the rollout of infrastructure projects.
IJM Corp posted a better performance in the fourth quarter ended March 31, 2022 (4Q22), due to improved earnings contributions across all divisions supported by the economic reopening.
UOB Kay Hian Research said IJM’s core net profit of RM211mil and revenue of RM4.4bil for 4Q22 was within its expectations.
“IJM’s earnings should recover gradually this year with higher construction activities due to the absence of lockdowns,” it added.
For the construction division, the research house said “the worst is over” with the reopening of the economy.
“We expect that accelerated progress billings coupled with more new job wins will support the earnings going forward, partially offsetting the ongoing inflationary pressure,” it said. For the financial year ended March 31, 2022 (FY22), UOB Kay Hian Research noted that IJM had won RM1.6bil worth of new contracts, exceeding its RM1.5bil assumption.
It said IJM’s current outstanding order book, which stood at RM4.26bil, would help support its recovery outlook.
On Mass Rapid Transit 3 (MRT3) project, analysts noted that IJM has indicated interest in two of the three tenders, one of it which is expected to involve 6km of elevated works and the another included the 27km of elevated works and 1.2km underground.
According to MIDF Research, IJM is in a good position to secure at least RM3bil worth of contracts, premised on its experience in MRT1 and MRT2.
“Its balance sheet and cash pile is also stronger now post-disposal of IJM Plantations and the group’s gearing now stands at about 36%, allowing it to offer quality financial propositions to fund the initial two years of the construction,” it said.
MIDF Research is keeping a “buy” call on IJM Corp, with a target price of RM2.18 as it remains positive on the group’s earnings momentum moving forward.