KUALA LUMPUR (Aug 28): IJM Corp Bhd (KL:IJM) is targeting to secure up to RM8 billion in new construction contracts for its current financial year ending March 31, 2026 (FY2026), supported by robust demand for data centres, property and infrastructure projects.
Its construction order book hit an all-time high of RM12.9 billion at the end of the first quarter, following two landmark contracts worth RM2.8 billion — the RM1.4 billion fully elevated extension of the New Pantai Expressway or NPE and a RM1.4 billion data centre project in Johor.
“We think the outlook for our construction order book is quite intact, despite the crossfire [US–China trade tensions],” IJM group chief executive officer and managing director Datuk Lee Chun Fai told the press following the group’s annual general meeting on Thursday.
And despite concerns about rising input costs and the expanded sales and service tax (SST), IJM is confident it can maintain its profit margins. "Currently, the commodity prices are not spiking up. In fact, some are coming down," Lee said.
On the SST, Lee said the industry is still awaiting clarification from the government on its application to construction contracts. He believes the impact will be transitional, with new projects expected to incorporate higher charges, while ongoing projects will continue under previous terms.
However, the group does not rule out the possibility that the SST, combined with anticipated fuel subsidy rationalisation, could negatively impact its property division.
"All these will effectively drive [up] negative sentiment. So, the conversion rate will take a bit longer," said IJM group chief financial officer Datuk Edward Chong Sin Kiat. The company will "wait and see" if it needs to revise its targets for the year based on demand in the second half, he added.
When asked if a stronger balance sheet would lead to higher dividends, Lee said this may not be the case as the group plans to use surplus cash to drive further growth for the group, instead of higher dividend payouts.
"The cash resources that we have with a comfortable gearing rate doesn’t mean we should just be rewarding shareholders. The idea is also how to have further growth for the company," he said.
IJM has consistently paid an eight sen dividend per share for three consecutive financial years since FY2023.
Shares in IJM closed five sen or 1.68% lower at RM2.93 on Thursday, bringing the group's valuation to RM10.69 billion.