KUALA LUMPUR (Jan 19): IJM Corp Bhd (KL:IJM) fell as much as 16.4% on Monday, prompting regulators to suspend intra-day short-selling of the stock.
The counter fell to a three-month low of RM2.34 before recouping some losses to trade at RM2.65 at 5pm, still down 15 sen or 5.36% from Friday's close. Year to date, the stock is up 16.74%.
The suspension was triggered after the counter dropped more than 15% or 15 sen from its reference price. Intra-day short-selling in the stock will resume on Tuesday (Jan 20) 8.30am, according to Bursa Malaysia’s special announcement.
The Edge has reached out to IJM for comment on the share price decline.
The construction company is a takeover target of Sunway Bhd (KL:SUNWAY), which has proposed to acquire IJM shares in exchange for cash of 31.5 sen per share, and 501 Sunway shares for every 1,000 IJM shares held.
IJM, meanwhile, issued a notification to its shareholders regarding Sunway’s takeover bid on Monday.
The offer to acquire all outstanding shares at RM3.15 apiece — based on the cash offer portion and Sunway's consideration of IJM shares at an issue price of RM5.65 apiece — is below most analysts’ target prices for IJM.
Kenanga Investment Bank said in its Jan 13 note that the offer is below its fair value of RM3.40, advising shareholders to reject the offer.
“In addition, the implied valuation is unfavourable, with Sunway’s issue price of RM5.65 translating into a lofty CY26F PER (price-earnings ratio) of 27.6x, compared with 19.4x CY26F PER implied by the RM3.15 offer for IJM,” it said in its note.
Nevertheless, a number of analysts have advised shareholders to accept the bid, citing an opportunity to crystallise IJM’s value and benefit from the long-term upside of the enlarged Sunway group.
The deal is also complicated by Sunway's plan to list its healthcare arm, Sunway Healthcare Holdings Bhd, on Bursa Malaysia.
Sunway intends to distribute 676.04 million Sunway Healthcare shares to existing shareholders via a dividend-in-specie, based on one Sunway Healthcare share for every 10 Sunway shares held, with the entitlement date yet to be determined.
Post-listing, Sunway’s effective stake in Sunway Healthcare will be diluted from 84% to nearly 70%.