AmWatch - IJM Corporation : Adds another building job to its impressive portfolio BUY

STOCK FOCUS OF THE DAY

IJM Corporation : Adds another building job to its impressive portfolio   BUY

We maintain our BUY call on IJM Corp with a revised fair value of RM4.10/share (previously: RM8.20/share) on an unchanged 10% discount to its NAV as we factor in its recently completed 1-for-1 bonus issue.

Last Friday, IJM announced that its subsidiary IJM Construction has secured a letter of award from Hotel Equatorial (M) Sdn Bhd and Fenghuang Development Sdn Bhd.

The award is for the main building works of a 52-storey mixed commercial development block named Equitorial Plaza in Jalan Sultan Ismail.

The contract value is worth RM455mil over three years. We believe the contract relates to the redevelopment of the old Equitorial Hotel.

More importantly, the latest award is further testament to IJM’s proven pedigree as a premium builder of high-rise or Grade A buildings within the Klang Valley.

We make no changes to our earnings estimates as the new job is within our new order book assumption for FY16F.

Looking ahead, we remain upbeat on IJM’s construction prospects ahead of a new wave of infrastructure spending.

IJM’s construction earnings should gain momentum in the coming quarters when works on the Kuantan Port expansion (Phase 1) and West Coast Expressway (WCE) begin.

Apart from the balance of works for the WCE (~RM2.2bil), we expect IJM to be in the mix for several infrastructure projects in the offing. These include the Klang Valley MRT 2, LRT 3 and Gemas-JB double tracking project.   

Others :

WCT Holdings : Finally gets off the mark locally   HOLD

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