KUCHING: IJM Corporation Bhd’s (IJM Corp) outstanding orderbook is expected to rise further to RM3 billion following its first job secured in financial year 2014.
MIDF Amanah Investment Bank Bhd research division (MIDF Research) in a report said the construction company has been awarded a contract recently from JKG Tower Sdn Bhd for the construction of two commercial blocks at Jalan Raja Laut, Kuala Lumpur worth RM238.4 million.
The construction company in an announcement to Bursa Malaysia on October 31, 2013 said the workscope of the project involves the building of one block of 32-storey office tower and one block of 13-storey elevated car park.
IJM Corp noted that the job is expected to start middle of this month with a duration of 26 months to complete.
With the additional job win, MIDF Research forecast that the income from the project is expected to contribute about RM16 million to its pre-tax profit until financial year 2015.
Meanwhile, the construction of the 316 kilometre (km) of West Coast Expressway (WCE) and the Kuantan Port expansion as announced during Budget 2014 recently would also benefit IJM Corp the most.
MIDF Research observed that this was because the construction company is the concession holders for both projects.
Aside from that, the research firm has inputed some RM4 billion of new jobs to be awarded to the company after incorporating WCE external job packages.
Therefore, MIDF Research expects the construction work for WCE to be rolled out in the coming months as WCE Sdn Bhd had closed its financials last month.
It further noted that the company will be submitting to the government evidence of its financial capability to start work on the project.
On the bright side, the research firm remained optimistic on the outlook of IJM Corp based on several notable catalysts.
These include its strong track record of securing jobs, the portion of the WCE project to double up its current orderbook, external construction job opportunities from new deep water terminal extension of RM1.5 billion in Kuantan Port, higher capacity utilisation rate and strong unbilled property sales of approximately RM1.9 billion.
Based on sum-of-parts valuation, MIDF Research worked out a fair value for the company’s share price at RM6.35 per share.