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MIDF Research upgrades IJM Corp to Buy, TP RM1.95

KUALA LUMPUR: MIDF Research has upgraded IJM Corp to Buy from Neutral following the recent weakness in its share price and after the infrastructure company bagged a RM530mil construction job.

“We maintain our TP of RM1.95 (pegging the FY21 book value per share to 0.7 times price-to-book value). Our TP implies +11.11% upside, ” it said on Wednesday.

IJM had bagged a RM530mil contract from LQ Residential 1 Sdn Bhd (a joint venture between international property and infrastructure group Lendlease and TRX master developer TRX City Sdn Bhd).

IJM will build the superstructure of the proposed two blocks of service apartments, namely TRX Residences at Tun Razak Exchange, Jalan Tun Razak/Jalan Davis, Bandaraya Kuala Lumpur. The completion period of the TRX project is 36 months.

“We understand that TRX Residences, the first contract bagged by IJM Corp in FY20, is a fourth addition to the group’s portfolio of iconic construction projects in TRX. It is an acknowledgement of its extensive expertise in high-rise building construction, ” it said.

MIDF Research said IJM Corp building HSBC Malaysia’s and Affin Bank’s new headquarters in TRX. Construction is scheduled to be completed by end of this year.

As for TRX’s Menara Prudential (developed and owned by IJM Corp), it was completed in May FY19 and currently 81% tenanted.

“Current order book estimated around RM5bil. We note that as of end February FY20, IJM Corp order book stood at RM4.5bil – consisting of 32% building projects, 11% infrastructure works and 56% road works. The new contract award will add another RM530mil, for a total of outstanding order book around RM5bil, ” it said.

Source: TheStar