KUALA LUMPUR (May 26): Hong Leong Investment Bank (HLIB) sees IJM Corporation Bhd’s (KL:IJM) win of the RM1.4 billion New Pantai Expressway (NPE) extension project and extension of the current concession, as a move that will boost its recurring toll income and support plans to partially sell its toll road assets. 

The sale would help IJM raise funds for new projects, or return cash to shareholders while keeping some control over the highways.

Analysts expect IJM’s new agreement with the government to extend the current NPE concession (ending in 2030), to match the new NPE extension timeline. Toll rates will stay the same until 2030, as part of the restructuring.

In a July interview with The Edge, IJM chief executive officer Lee Chun Fai said resolving the NPE concession was a top priority for financial year 2025 (FY2025). He also said he prefers using a business trust model and may sell up to 50% of IJM’s toll road assets.

IJM owns or has stakes in several highways: NPE (100%) — concession ends in 2030, expected to be extended; Besraya (100%) — 28.9km highway, concession extended to 2046; LEKAS (50%) — 44.3km highway, concession extended to 2064; and West Coast Expressway (WCE) — 233km under construction, IJM owns an effective 41% stake.

It said the NPE extension boosts IJM’s order book to RM7.4 billion, 4.5 times its FY2024 construction revenue, and already covers 40% of its FY2026 contract win target. Additional project wins worth RM1.5 billion are expected.

Maybank Investment Bank estimates that the NPE extension project (RM1.4 billion cost, RM1.55 billion with financing) will bring in RM85 million profit between FY2026–FY2030. The updated toll concession could add RM440 million (or 12 sen per share) in value to IJM’s toll assets. It also expects IJM to secure RM4 billion in new contracts in FY2026.

15 out of 17 analysts covering the stock have a “buy” rating on IJM, with a 12-month target price of RM3.28 a share.

At midday break on Monday, the stock was trading 0.41% lower at RM2.40, giving it a market capitalisation of RM8.4 billion.