- Maintain
BUY on IJM Corp with an unchanged fair value of RM5.71/share. This pegs the
stock at a 10% discount to its sum-of-parts (SOP) value.
- IJM
recorded a core net profit of RM130mil in 3QFY13, bringing 9MFY13 figures to
RM373mil or a marginal 2% growth YoY. Higher contributions from the
construction and property divisions were mainly offset by a dip in the infrastructure
and plantation divisions.
- 9MFY12
results constituted 82% of our FY13F forecast (consensus: 78%). However, we are
keeping our full-year forecast of RM453mil (+7% YoY) on expectations of a sequentially
slower 4Q due to the festive period.
- Construction
earnings rose 138% YoY for the 9MFY13 period on the increasing weight of local
jobs. Accordingly, construction pre-tax margins slightly more than doubled YoY
to 6.6%.
- Similarly,
property earnings expanded 17% (margin: +2ppts at 25.5%) on a pick-up in
billings – particularly for signature projects such as The Lights in Penang.
- The
industries division suffered a 10% YoY drop in sales tonnage, no thanks to a
delay in project roll-out and slower export sales.
- Plantation
earnings sagged 37% YoY on a 14% YoY in drop in CPO sales volume for the
current year-to-date. Additionally, CPO prices fell 23% YoY during the quarter
to RM2,277/tonne.
- Stripping
off lower unrealised forex losses on mainly US$-denominated Indian debt, the
infrastructure division’s earnings actually fell 9% YoY. We finger this to
continued losses over at its young Indian toll concessions, which more than
offset steady contributions from Kuantan Port.
- We tip
IJM’s tender book to be busy, with the pace of domestic jobs likely to gain
traction post-elections. We expect significant order book upside for IJM once contracts
from the West Coast Expressway start coming through from 4Q13.
- We expect
the maiden launch of Bandar Rimbayu to be an instant success. Phase 1, set for
launch this weekend, has already generated over 16,000 registrants on just 500
units on offer.
- More
valuation upside is to come for IJM if the Kuantan Port expansion plan (via a
JV with China’s ) materialises in six months’ time.
Source: AmeSecurities
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