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
Ticker Symbol: KLSE: IJM / KLSE: 3336
Market Capitalization: RM 11.1 Billion (17 November 2017)
Share Price: RM 3.06 (22 October 2017)
Syariah Compliant: Yes
#2: The Business
Presently, IJM Corporation Bhd derives income from five main business divisions. They are:
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.
- 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.
- 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.
- 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.
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:
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.
- 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.
- 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).
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.
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.
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
#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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