IJM sees potential RM9b order book

KUALA LUMPUR: IJM Corp Bhd is positive on building up its construction order book for FY12 ending March 31 on the back of new infrastructure projects rolling out this year.

Its CEO and managing director Datuk Teh Kean Ming said after the group AGM yesterday that it currently has an order book of RM3.7 billion,  which could go up as high as RM9 billion given the prospective rollout of the West Coast Expressway (WCE) and New Pantai Expressway (NPE) expansion projects, “barring unforeseen circumstances”.
IJM Land’s order book reached a peak of RM6.7 billion in 2007.

The WCE and NPE jobs are estimated to be valued at RM4 billion and RM1 billion. Teh said the details of the NPE extension are expected to be finalised by end-October.

“By that time, we will have finalised all details including costs, and the land acquisitions that may be needed,” he said. IJM Corp subsidiary, New Pantai Expressway Sdn Bhd, was given the green light by the government in April to extend the NPE to the city centre.

He said IJM Corp would focus on local projects due to encouraging prospects given the infrastructure initiatives under the Economic Transformation Programme (ETP).
IJM Corp submitted a pre-qualification bid for the MRT project, and is partnering with a foreign player to bid for the non-tunnelling portion as well. Analysts have estimated the total MRT to be worth RM20 billion.

An aerial view of the New Pantai Expressway. Details of the highway extension are expected to be finalised by end-October.

Teh said construction pre-tax margins are expected to normalise to 6% to 8% from the current 2% to 3%.
On overseas projects, Teh said, “It is not conducive to take up any jobs in India at the moment due to the high interest rate and escalation of material costs.”

He said IJM Corp has made the necessary provisions totalling RM70 million for its India projects in 4QFY11 ended March 31, and does not see any more provisions for it.
“The provisions were done according to FRS139. But this does not mean we are writing off our debts. We will do the writebacks whenever we get our receivables for our project in India. There will be no more write-offs after this,” he said.

He said IJM Corp is also buying the minority stakes of two of its Indian toll concessionaires so it can realise its full potential earnings in the future.

It currently holds a 35% stake in the Swarna tollway, and a 49% stake in Chilkaluripet-Vijayawada Tollway.

“While these tolls are still loss-making [which is usual for new tolls], we expect higher returns to come as Indian toll tariffs are increased every year based on the country’s inflation.

Given the country’s inflation, this will be good for us,” he said. Apart from the two tollways, IJM Corp also wholly owns the Rawa and Jaipur tollways in India.

Teh said there are no plans to privatise IJM Land. IJM Corp yesterday saw Tan Sri Abdul Halim Ali replacing Tan Sri Datuk Wan Rahman Wan Yaacob as chairman.

For 1QFY12 ended June 30, IJM Corp’s net profit rose 22.2% to RM160.8 million from RM131.55 million a year earlier.

In its filings with Bursa, IJM Corp attributed the rise to earnings growth in its construction and industry divisions and higher margins reported in its plantation and infrastructure divisions.

Revenue rose 4.7% to RM1.03 billion from RM986 million, while basic earnings per share (EPS) was 9.03 sen against 6.76 sen. Construction was the main contributor to the group’s revenue, contributing 31.2% or RM322.7 million. IJM Corp fell one sen to close at RM5.81 yesterday with 1.21 million shares done.

IJM Land Bhd and IJM Plantations Bhd recorded mixed results for their 1QFY12 ending June 30.

IJM Plantations’ net profit grew 66% to RM49.47 million from RM29.9 million a year earlier, due mainly to higher crude palm oil and palm kernel oil prices.

Its revenue grew 8.9% to RM123.35 million from RM113.26 million. EPS was 6.17 sen compared with 3.73 sen a year ago, while net assets per share was RM1.61.

In filings with Bursa yesterday, IJM Plantations said assuming that current palm oil sustains, it is expecting “a satisfactory level of profitability, barring unforeseen circumstances” for FY12.

IJM Land’s net profit fell 24% to RM40.7 million for 1QFY12, from RM53.5 million a year earlier. Revenue fell 31% to RM252.35 million from RM364.9 million a year earlier.

IJM Plantations climbed two sen to close at RM2.58 yesterday, while IJM Land closed one sen lower at RM2.50.