IJM Corporation (RM4.53; Buy; Price Target: RM6.00; IJM MK)
Receives Letter of Award for Besraya contract
IJM has accepted the Letter of Award dated 19 March 2010 from Besraya (M) Sdn Bhd (Besraya) for the Proposed Design, Construction, Completion and Commission of Projek Sambungan Lebuhraya Sungai Besi for RM600m. The construction period is 36 months.
This is slightly lower than the expected RM649m but nonetheless a strong positive for the group as it represents the first contract win for 2010. This will lift IJM’s orderbook by 17% to RM4.2bn and account for half of our RM1.2bn order win assumption for FY10. As such, we are not changing our earnings forecast.
Other potential contract wins could come from the RM750m-RM850m LCCT terminal building, RM400m-RM500m LCCT satellite building, RM700m hospital job in Putrajaya and revival of road contracts in India. We understand our Prime Minister may sign a MoU with the India transport soon which will potentially see more active participation from Malaysian contractors in India. IJM is the prime beneficiary of this having been in the market for more than 12 years.
Reiterate our Buy rating on IJM with an unchanged TP of
RM6.00 based on SOP.
source: HwangDBS Securities