Stock Name: IJM
Company Name: IJM CORPORATION BHD
Research House: AMMB
IJM Corp Bhd
(May 9, RM6.20)
Maintain buy at RM6.20 with fair value of RM7.74: We maintain our 'buy' recommendation on IJM Corp Bhd with an unchanged sum-of-parts- (SOP) derived fair value of RM7.74.
Last Friday, IJM announced that its wholly-owned unit IJM Vijayawada (Mauritius) Ltd had entered into a share sale agreement to acquire 14 million shares representing a 48.9% stake in Vijayawada Tollway Pte Ltd.
Vijayawada Tollway is the concessionaire for the conversion of the existing four-lane Chilkaluripet-Vijayawada highway in Andhra Pradesh, India, into six lanes. The stretch measures 82.5km, from km355 to km434.15 of NH-5.
IJM has proposed to acquire the 48.9% stake in Vijayawada Tollway for RM28 million. This would lift its effective stake in the highway from 48.9% to 99.97%.
Vijayawada Tollway is just one of five highway concessions in IJM's stable in India.
Together with a 20% stake the Gautami power concession, IJM's infrastructure investments in India account for 96 sen per share or about 12% the group's SOP value.
Pending further information on the time line of the acquisition, we maintain our forecast for now ahead of IJM's upcoming FY11F results, due to be released on May 27. We estimate that the deal will lift IJM's SOP value by nine sen per share or about 1.2%.
We are increasingly positive about IJM's strategic positioning ahead of improving domestic contract flows in the coming months.
The group recently announced it could be at the forefront for capex works on two highways worth a combined RM5 billion ' the West Coast Expressway and the New Pantai Expressway extension.
Based on its track record, we reckon that IJM would also be a leading candidate for other big-ticket jobs (for example the Klang Valley LRT/MRT works, Seremban-Johor Bahru double-tracking railway project, Langat 2 WTP).
Backed by an outstanding order book of RM4 billion, IJM is well on track to achieve a record order book in FY12F, potentially surpassing the previous peak of RM6.7 billion in FY07.
IJM remains our top large-cap pick on the back of a re-acceleration of contract flows in Malaysia. We have assumed the group will achieve RM3.5 billion worth of new contracts in FY12F against an estimated RM2.2 billion in FY11F. ' AmResearch, May 9
This article appeared in The Edge Financial Daily, May 10, 2011.
Company Name: IJM CORPORATION BHD
Research House: AMMB
IJM Corp Bhd
(May 9, RM6.20)
Maintain buy at RM6.20 with fair value of RM7.74: We maintain our 'buy' recommendation on IJM Corp Bhd with an unchanged sum-of-parts- (SOP) derived fair value of RM7.74.
Last Friday, IJM announced that its wholly-owned unit IJM Vijayawada (Mauritius) Ltd had entered into a share sale agreement to acquire 14 million shares representing a 48.9% stake in Vijayawada Tollway Pte Ltd.
Vijayawada Tollway is the concessionaire for the conversion of the existing four-lane Chilkaluripet-Vijayawada highway in Andhra Pradesh, India, into six lanes. The stretch measures 82.5km, from km355 to km434.15 of NH-5.
IJM has proposed to acquire the 48.9% stake in Vijayawada Tollway for RM28 million. This would lift its effective stake in the highway from 48.9% to 99.97%.
Vijayawada Tollway is just one of five highway concessions in IJM's stable in India.
Together with a 20% stake the Gautami power concession, IJM's infrastructure investments in India account for 96 sen per share or about 12% the group's SOP value.
Pending further information on the time line of the acquisition, we maintain our forecast for now ahead of IJM's upcoming FY11F results, due to be released on May 27. We estimate that the deal will lift IJM's SOP value by nine sen per share or about 1.2%.
We are increasingly positive about IJM's strategic positioning ahead of improving domestic contract flows in the coming months.
The group recently announced it could be at the forefront for capex works on two highways worth a combined RM5 billion ' the West Coast Expressway and the New Pantai Expressway extension.
Based on its track record, we reckon that IJM would also be a leading candidate for other big-ticket jobs (for example the Klang Valley LRT/MRT works, Seremban-Johor Bahru double-tracking railway project, Langat 2 WTP).
Backed by an outstanding order book of RM4 billion, IJM is well on track to achieve a record order book in FY12F, potentially surpassing the previous peak of RM6.7 billion in FY07.
IJM remains our top large-cap pick on the back of a re-acceleration of contract flows in Malaysia. We have assumed the group will achieve RM3.5 billion worth of new contracts in FY12F against an estimated RM2.2 billion in FY11F. ' AmResearch, May 9
This article appeared in The Edge Financial Daily, May 10, 2011.
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