Here Are 8 Things You Must Know About IJM Corporation Bhd

It was the early 1980s.

Directors of three local mid-size construction firms, IGB Construction Sdn Bhd, Jurutama Sdn Bhd, and Mudajaya Sdn Bhd have agreed to joint forces, merging into one larger entity to compete against larger foreign construction firms for bigger projects in Malaysia.

The entity is known as IJM Corporation Bhd. It is named after the three initials where ‘I’ represents IGB Construction, ‘J’ represents Jurutama, and ‘M’ represents Mudajaya. Established in 1983, IJM Corporation Bhd was subsequently listed on the Kuala Lumpur Stock Exchange in 1986. At that time, it was worth RM 66 million in market capitalization.

Fast forward 30 years, IJM Corporation Bhd has matured into one of the largest conglomerates in Malaysia. As I write, it is worth RM 11.1 billion in market capitalization. Thus, in this article, I’ll cover 8 quick things that you need to know about IJM Corporation Bhd before you invest.

#1: Stock Symbol

1

Ticker Symbol: KLSE: IJM / KLSE: 3336
Market Capitalization: RM 11.1 Billion (17 November 2017)

Share Price: RM 3.06 (22 October 2017)

Sector: Construction

Syariah Compliant: Yes

#2: The Business

Presently, IJM Corporation Bhd derives income from five main business divisions. They are:

  1. Construction
    IJM Corporation Bhd has built an impressive track record of building expressways in Malaysia and India. Its notable projects include New Pantai Expressway, Besraya & Extension, and Lekas in Malaysia and Swarna, Rewa, and Chilkaluripet – Jijayawada in India. In 2017, this division has generated RM 2.53 billion in revenues, accounting for 36.6% of the group’s operating revenues. Thus, it is the main sales contributor to IJM Corporation Bhd.
  2. Property Development
    IJM Land is the property arm of IJM Corporation Bhd. Presently, it is involved in large-scale township projects such as Bandar Rimbayu,  S2 Heights,  Shah Alam 2, and Seremban 2 which are located at the Central Region of Peninsula Malaysia. In 2017, this division has made RM 1.52 billion in revenues, accounting for 21.9% of the group’s operating revenues. Thus, it is the second largest sales contributor to IJM Corporation Bhd.
  3. Manufacturing & Quarry
    Presently, IJM Corporation Bhd operates 10 pile factories and 9 quarries with annual production capacity of 2.0 million tonnes and 8 million tonnes respectively. In 2017, this division has generated RM 1.14 billion in revenues, accounting for 16.4% of the group’s operating revenues. It is the third largest sales contributor to IJM Corporation Bhd.
  4. Infrastructure Concessions
    This division holds multiple long-term concessions to various infrastructure assets, namely highways, port, water treatment and power plant facilities. In 2017, this division has made RM 975.5 million in revenues, accounting for 14.1% of the group’s operating revenues. It is the fourth largest sales contributor to IJM Corporation Bhd.
  5. Plantations
    IJM Plantations Bhd is the plantation arm of IJM Corporation Bhd. It has 60,570 hectares of oil palm plantations located in Malaysia and Indonesia which had produced 862,435 metric tonnes (MT) of fresh fruit bunches (FFB) in 2017. It also operates 6 palm oil mills with a total FFB processing capacity of 375 MT per hour. In 2017, IJM Plantations Bhd has made RM 753.7 million in revenues, accounting for 10.9% of the group’s operating revenues. It is the fifth largest sales contributor to IJM Corporation Bhd.  

#3: The Financials

Inclusive of joint venture revenues, IJM Corporation Bhd has grown its operating revenues from RM 5.34 billion in 2012 to RM 6.92 billion in 2017.

The growth in operating revenues was contributed by higher sales achieved from its construction, manufacturing & quarry and infrastructure divisions respectively. This has contributed to higher shareholders’ earnings, up from RM 409.1 million in 2012 to RM 653.8 million in 2017.

Source: Annual Reports of IJM Corporation Bhd

#4: Growth Plans

IJM Corporation Bhd has built a pipeline of projects which would contribute to its financial results in the immediate future. They include:

  1. Construction
    IJM Corporation Bhd has secured RM 3.0 billion in construction order book in 2017. This includes the KVMRT Project Line 2 – V203 Package worth RM 1.47 billion and the retail mall project in Bukit Bintang City Centre worth RM 1.16 billion. In addition, the company has secured two additional order book, namely UOB Tower 2 and the IJM-CHEC JV Kuantan Breakwater worth RM 450 million and RM 280 million respectively. This has lifted up its construction order book to RM 8.7 billion as at 23 August 2017.
  2. Property Development
    IJM Land has undeveloped land bank of 4,000 acres with potential gross development value (GDV) of over RM 30 billion. Looking ahead, IJM Land plans to launch Riana South at Cheras in October or November 2017 and Riana Dutamas at Segambut in January 2018.
  3. Infrastructure Concessions
    Three of IJM Corporation Bhd’s concessions would expire before 2020. They include Western Access Tollway in Argentina (2018), Rewa highway in India (2019), and Binh Ah Water Corporation (2019). The remaining concession assets are expected to contribute long-term income to IJM Corporation Bhd. They include Gautami Power Plant (2024), Chilkaluripet – Jijayawada (2025), New Pantai Expressway (2030), Swarna highway (2031), Lekas highway (2039), Besraya & Extension (2040), and Kuantan Port (2045). Presently, it is building two concession assets, namely the West Coast Expressway (2073) and Dewas highway (2042).
  4. Plantations
    The weighted average age of IJM Plantations Bhd’s oil palm plantations is 9.5 years. 15% of its plantations are immature while 49% of its plantations are young. Most of these plantations are located in Indonesia, thus, would produce more FFBs as they continue to mature over time.

 

#5: Risks

IJM Corporation Bhd has identified several risks which are specific to the nature of businesses it is involved in. For instance, a slowdown in the local economy may affect the conglomerate’s order book replenishment activities in the construction, manufacturing & quarry divisions. Lending policies may affect local property sales. Meanwhile, fluctuations in the price of crude palm oil (CPO) may affect the profitability of its plantation division.

#6: Valuation

As I write, IJM Corporation Bhd is trading at RM 3.06 a share.

In 2017, IJM Corporation Bhd has reported to make RM 0.182 in earnings per share (EPS). Thus, its current P/E Ratio works out to be 16.81.

In 2017, IJM Corporation Bhd has reported to have RM 2.638 in net assets a share. Thus, its current P/B Ratio works out to be 1.160.

In 2017, IJM Corporation Bhd has declared and paid out RM 0.075 in dividends per share (DPS). If the conglomerate is able to maintain its DPS at RM 0.075 in 2018, thus, its expected dividend yields would be 2.45%.

#7: Investor Relations

For further enquiries on IJM Corporation Bhd’s Investors Relation matters, you may contact:

Mr. Shane Guha Thakurta

Senior Manager, Investor Relations

Telephone: 03-7985 8288

Email: ijmir@ijm.com

#8: Major Shareholders

As at 16 June 2017, the substantial shareholders of Gamuda Bhd are:

  • Employees Provident Board Bhd: 14.70%
  • Amanah Saham Bumiputera: 6.08%
  • Lembaga Tabung Haji: 5.51%
  • Kumpulan Wang Persaraan (Diperbadankan): 3.21%
  • Amanah Saham Malaysia: 2.62%

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Ian Tai

Ian Tai is the founder of Bursaking.com.my, a platform that empowers retail investors to build wealth through ownership of fundamentally solid stocks. It is an essential tool that sifts out stocks that grow profits consistently from a database of over 900+ stocks listed mainly in Malaysia. As a Malaysian with close family ties in Singapore, Ian publishes a series of newsletters on how anyone can invest profitability in both countries.

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