With more clarity on MRT 3 and the ECRL Link to Kuantan Port, CGS-CIMB Research believes IJM will likely beat its RM3 billion new order win forecast for FY3/24F
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00:00 So, IJM Corp recently clinched a contract for the JB Singapore RTS Link.
00:06 CJSCIMB Research maintains its ad recommendation on the counter, with an unchanged target price
00:12 of RM2.15.
00:14 The stock ended on Friday at RM1.90.
00:17 In its note, CJSCIMB said, "The contract comes with a provisional sum of RM155 million,
00:24 which entails work that has not been identified at the point of the award, so it's estimating
00:29 the win to total RM1.26 billion.
00:32 There is no specific margin guidance for this project, but the research house says pre-tax
00:37 margins should be in the range of 6-9%."
00:40 This job takes its year-to-date wins to RM2.2 billion for FY24.
00:45 This versus IJM's guidance of RM3 billion new order wins for the full fiscal year.
00:50 CJSCIMB's forecast stands at RM3.5 billion.
00:54 It explains that IJM is likely to exceed its target if key contract wins such as the
01:00 circa RM1 billion ECRR contract, packages under MRT3 and projects in Indonesia, India
01:06 and East Malaysia come to fruition.
01:09 It says key catalysts could come from higher-than-expected new order wins in FY24, surpassing IJM's
01:15 RM3 billion guidance, more asset and land monetization, recovery in Kuantan port throughput
01:21 and higher property sales.
01:23 Key downside risks are a prolonged economic slowdown and higher raw material costs, which
01:28 could crimp its margins.
01:30 A look now at consensus.
01:31 According to Bloomberg data, there are 10 buy, 7 hold and 1 sell calls on IJM, with
01:37 an average target price of RM2.
01:39 The counter last closed at RM1.90, so that's a potential upside of some 5%.
01:44 [Music]