Maybank Investment Bank (Maybank), in its Malaysia Company Update today (June 28), reported positive developments for IJM Corporation following its latest job win to construct a data centre in Iskandar Puteri, Johor.
Maybank viewed IJM’s capabilities in high-tech industrial building construction favourably, supported by its IBS and spun piles operations. Maybank maintained its earnings forecasts and RNAV-based TP of RM 3.30 for IJM, reaffirming a BUY recommendation.
IJM’s 100%-owned construction unit secured a RM 332m contract to design and construct Block 2 of the Iskandar Puteri Data Centre for TM Technology Services S/B. The scope of work included foundation, sub-structure, super-structure, building works, mechanical and electrical services, fit-out works, testing, and commissioning. The data centre aimed to achieve Uptime Institute Tier III certification, ensuring maintenance without downtime due to redundant systems, with construction set to begin in July 2024 and completion by 3QCY25.
The contract raised IJM’s outstanding construction orderbook to RM 7.3b, providing earnings visibility into FY26E. Assuming an 8% PBT margin, Maybank estimated a RM 20m net profit contribution in FY25-26E from this contract. The earnings forecasts remained unchanged, having already factored in a RM 5b job win assumption for FY25E, with RM 1.3b secured YTD.
The group expects this data centre job to highlight its ability to execute complex, high-speed construction projects as it diversified its high-tech industrial building construction offerings. The company planned to leverage its internal supply chain, including the SMART IBS solution, to expedite the construction process and utilise its spun piles capabilities, which contributed to 25% of data centres, logistics warehouses, and E&E manufacturing projects in FY24.
Maybank remained positive on IJM’s prospects and recommended investors consider the stock for its growth potential in the high-tech industrial construction sector. The favourable risk-reward profile, supported by strategic job wins and strong orderbook, positioned IJM well for future earnings growth.
