KUALA LUMPUR (August 28): IJM Corp Bhd shares may gain from the potential listing of the diversified entity's highway concessions, CIMB Investment Bank Bhd says.
In a note, CIMB analyst Sharizan Rosely said there is upside to IJM's valuation as the company unlocks the value of these assets.
"Expectations of a potential listing of IJM’s highway and port assets should support its share price. IJM owns the largest number of highway concession assets in the country.
“These assets make up 67% of the group's concession assets by value and 37% of its RNAV (revised net asset value)," said Sharizan whose note was issued following the announcement of IJM's first quarter results.
Yesterday, IJM said net profit rose to RM164.34 million in the first quarter ended June 30, 2013 (1QFY13) from RM88.83 million a year earlier. Revenue was higher at RM1.4 billion compared to RM1.04 billion.
Sharizan said the annualised 1QFY13 numbers account for 80% of CIMB's and consensus forecast, hence, in line with market expectation. He said the 1Q is usually the weakest period for IJM, the businesses of which, include construction, real estate and plantations.
"We continue to value the stock at a 10% discount to RNAV but cut our target price (to RM6.43 from RM6.80) as we update the balance sheet items.
"Construction margins which were dented in 1Q may see upside from new projects. We reiterate our “outperform” rating given the favourable prospects for new contracts, especially for oil & gas infra," Sharizan said.