Pick up in construction billings in coming quarters for IJM

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KUCHING: For the quarter under review, IJM Corporation Bhd (IJM) reported a core net profit of RM141 million, taking first half financial year 2014 (1HFY14) core earnings to RM278 million or circa 43 per cent of full-year estimates.

AmResearch Sdn Bhd (AmResearch) attributed the lower year on year (y-o-y) earnings to a marked 44 per cent drop annually in construction billings, lower contributions from property and industries divisions, as well as higher effective tax rates.

“We however maintain our core net profit forecast of RM647 million for FY15 forecast.

“This being the case as we expect a pick-up in construction billings in the coming quarters as the weight of new jobs gets more pronounced, notably for the first RM2.8 billion package that IJM has secured from the West Coast Expressway project,” said AmResearch.

Despite the shortfall in billings, construction earnings actually expanded circa 2.5 times y-o-y to RM94 million as margins recovered to roughly 19 per cent vs four per cent a year ago, although this was partly attributable to favourable forex movements.

Property revenue improved 11 per cent y-o-y on higher billings from the Shah Alam 2 as well as Bandar Rimbayu projects. Earnings, however, fell seven per cent y-o-y on un-favourable forex positions.

Unbilled sales was circa RM1.8 billion. The research house added that the gains from the plantation division largely came about from higher CPO and product prices while elsewhere, the aborted proposal to acquire the SILK highway could dent sentiment on IJM’s share price in the near term.

“There is, however, no impact on our earnings forecast, as we have yet to account for any contributions from SILK,” said AmResearch.