IJM Corp earns ‘outperform’ rating on the back of recent acquisitions
Published on: Monday, January 15, 2024
By: Bernama
RHB Research estimates the potential gross development value of IJM Corp Bhd’s The Wheat Quarter acquisition in the UK to be at least RM1.78 billion. (IJM pic)
PETALING JAYA: Kenanga Research has maintained its “outperform” stance on IJM Corp Bhd following news of recent acquisitions.
The research house said the acquisitions include a 25% stake in Global Vision Logistics Sdn Bhd (GVL), the developer of the Shah Alam International Logistics Hub (SAILH), from Swift Haulage Bhd and Hartamas Mentari Sdn Bhd for RM88.7 million, which is expected to be completed by the first quarter of 2024 (Q1 2024).
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The construction company had also acquired a 4.45-hectare brownfield site, known as The Wheat Quarter in the UK, to develop 811 homes and mixed-use space.
“We are neutral on the investment in the logistics hub given its insignificant contributions in terms of recurring rental and related incomes.
“Meanwhile, acquiring sites in the UK is part of IJM Corp’s expansion strategy to build on its success in the Royal Mint Garden project in Central London,” Kenanga Research said in a statement.
The research house viewed IJM Corp’s latest move, teaming up with Network Rail, the owner and infrastructure manager of most of the railway network in the UK, as being highly strategic.
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Kenanga Research has set the target price for IJM Corp’s shares at RM2.31 per share.
Meanwhile, RHB Research increased its target price to RM2.47, up from RM2.21.
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“We are also ascribing a higher target price-to-earnings ratio of 16 times (compared to the previous 12 times) for the construction arm, reflecting the level IJM was trading at during the mid-2017 construction upcycle,” RHB said.
Based on a viability executive summary, RHB Research said the potential gross development value of the Wheat Quarter site development would be at least 300 million pounds (RM1.78 billion).
As at 12.29pm, IJM Corp’s share price was up by 13 sen or 6.22% at RM2.22, giving it a market capitalisation of RM8.10 billion.
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