Latest contract win shows IJM could hold its own, analysts say amid takeover bid

KUALA LUMPUR (April 2): A new contract proves that IJM Corporation Bhd (KL:IJM) could hold its own in the construction industry amid a takeover offer by a larger peer, analysts said.

With the latest win, IJM now has a chance to secure the mechanical, engineering and plumbing works contract for the same project in Elmina Business Park that could be awarded later, according to Kenanga Investment Bank and CGS International.

“We think this is a meaningful and timely win for IJM,” said CGS International. “We believe that it is testament to IJM’s strong construction franchise.”

The contract worth RM658 million comes ahead of the April 6 deadline to accept a takeover offer from Sunway Bhd (KL:SUNWAY). With days left before the closing date, research houses, including MBSB Research and Hong Leong Investment Bank, are reiterating to their clients to accept the offer.

Major shareholder Permodalan Nasional Bhd has publicly stated its intention to reject the offer while the Employees Provident Fund and Retirement Fund Inc reportedly have plans to decline Sunway’s bid for the shares.

Together, the resistance of government-linked investment companies, which hold 43% of IJM shares, may scuttle the deal.

TA Securities, which is nevertheless recommending shareholders to accept the offer, noted that the total value of jobs on hand at IJM will provide earnings for the next three to five years.

Further, IJM could get RM6.8 billion worth of new contracts in the financial year ending March 2027, “enhancing its new order book replenishment visibility”, the research house said.

Shares of IJM were up four sen or 1.8% to RM2.27 at the midday trading break on Thursday, valuing the company that also owns ports and tolled roads at RM8.3 billion.

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