Maybank IB Research retains buy on IJM, TP RM2.18

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KUALA LUMPUR: Maybank Investment Bank Research is maintaining its earnings forecast for IJM Corp for now and its realised net asset value (RNAV) target price of RM2.18.

It said on Thursday, amid the pandemic disruption, IJM remains focused on building resilience and growth and nurturing its capabilities for the longer term, the latter with digital transformation, sustainability, risk management, and people competencies as the anchors.

“All its business segments are not spared the ongoing full movement control order (FMCO), but we expect a quick rebound once the pandemic is brought under control, ” it said.

Maybank Research hosted IJM’s top senior management at its Invest Asean 2021 event on Monday.

The main conversation topics were on: (i) the group’s strategic focus; and (ii) impact of the ongoing FMCO on its operations. In addition, travel restrictions due to the pandemic has contributed to the delay in foreign investment decisions in Malaysia-China Kuantan Industrial Park (MCKIP).

The impact of rising construction material cost is manageable for IJM, but this will affect new projects/launches in the construction/property sectors, moving forward.

“Elsewhere, management is engaging with the lenders of IJM Plantations relating to IJM’s sale of 56.2% IJMP; recall, approval from the lenders is a condition, ” it said.

Over the near-to-medium term, IJM will continue to aggressively pare down its property inventory and sell low-yielding assets; in FY21, it sold ICP Jiangmen and some industry assets for RM120mil, and RM610mil of completed property inventory.

“Relating to capital management, IJM has bought back 1.05% of its shares as of Monday; it will continue to be active, ” it said.

Maybank Research said its RNAV-TP for IJM has incorporated the offer for IJMP at RM3.10 a share.

It applied target price-to-earnings ratio (PERs) to IJM’s construction and industry ops, and value its infrastructure ops using equity DCF and its property ops using NPV of potential profits.

IJM’s foreign shareholding meanwhile is at its lows, at 12.2% end-Jun 2021; the latest fall was in August-September 2020 after the stock was excluded from the MSCI Global Standard Indexes.



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