This article first appeared in Capital, The Edge Malaysia Weekly on February 16, 2026 - February 22, 2026

WE agree that the offer to acquire all of IJM Corp Bhd (KL:IJM) is very positive for Sunway Bhd (KL:SUNWAY), but it does not benefit the shareholders of IJM. And we will show why this is so. Our analysis is based purely on financial data.

Table 1 and Chart 1 show the historical performance of IJM, including the segmental profit contributions for the last seven years. Applying a price-earnings (PE) multiple of 15 times to the sustainable net profit gives a valuation of RM4.875 billion. Its properties are valued at net assets of RM7 billion (after deducting its RM851 million outstanding perpetual sukuk). This gives a total valuation of RM11.875 billion for IJM.

Table 2 and Chart 2 show the historical performance of Sunway. We applied the same 15 times PE multiple to the net profits of its non-listed businesses, valued its properties at net assets and aggregated the above with the market values for its two listed companies (Sunway Construction Group Bhd [KL:SUNCON] and Sunway REIT [KL:SUNREIT]) at prevailing prices, plus Sunway Healthcare Holdings Bhd at initial public offering (IPO) valuations. This gives Sunway a total valuation of RM31.441 billion, or RM4.65 per share, based on its current outstanding share capital of 6.76 billion shares.

In other words, we applied the same valuation parameters and justification to both IJM and Sunway. Obviously, the assets of these two companies are not the “exact same”, but they are “similar”. And because they are aggregated, we believe any biases are likely to be offset, so that the net bias for the aggregate valuations are unlikely to be significant.

1.Sunway’s offer of RM11 billion for IJM is slightly below our valuation of RM11.875 billion — but not by too much, just about 7%, and valuation is not a science. So, we can accept this.

2.Sunway’s offer, however, is not in cash. The takeover offer of RM3.15 per IJM share is composed of the issuance of 501 Sunway shares at RM5.65 apiece per 1,000 IJM shares (90% of the total offer price) plus 31.5 sen cash per share (only 10% of the total offer price). Based on Sunway’s current outstanding share capital of 6.76 billion, the share offer prices Sunway at a valuation of RM38.2 billion. Is this a fair and reasonable valuation?

As shown in Table 2, Sunway’s valuation should be about RM31.4 billion, or only RM4.65 per share.

In other words, if Sunway shares were to trade on valuations based on the same parameters assigned to IJM (in the takeover offer), IJM shareholders would effectively be paid:

1.Cash — RM1.104 billion (31.5 sen x 3,505 million outstanding IJM shares) plus

2.Shares — RM8.166 billion (501 Sunway shares for every 1,000 IJM shares at a fair value of RM4.65 per share)

3.Actual purchase value = RM9.27 billion versus our RM11.875 billion valuation for IJM and Sunway’s RM11 billion offer price.

1.IJM is not a small company that needs scale to compete;

2.IJM has always been managed by independent professionals — and has a track record of success to prove it;

3.IJM has the support of major institutional investors (Table 3). In other words, it does not need to establish credibility; and

4.IJM shares are actively traded — an average of 11.7 million shares daily, or 0.33% of total shares outstanding (see Chart 3).

Acquiring a company with shares — without offering an ALL-CASH option — speaks volumes in itself.

If Sunway shares are indeed “cheap” and the valuation of RM38.2 billion is justified (relative to IJM), would it not make more sense for Sunway to pay the RM11 billion in cash so that its shareholders will not be diluted? The cash can be raised through short-term financing, to be repaid via a subsequent placement or rights issue.

And if the case for the merger is that the combined entity will create significant value — meaning, the future value of Sunway will go up by more than the RM11 billion acquisition price — then surely the shareholders of Sunway will gain even more via an outright cash offer?

Back in 2021, Kuala Lumpur Kepong Bhd (KL:KLK) bought IJM’s 56.2% stake in IJM Plantations Bhd and subsequently launched a mandatory general offer for the rest of the remaining shares for an all-cash offer totalling RM2.73 billion. The offer price valued IJM Plantations at a price-to-book multiple of two times — well above the prevailing industry average of 1.2 times at the time, and at a premium of more than 50% over IJM Plantations’ last five-day volume-weighted average price. The point is that an offer to buy needs an all-cash option because cash is certainty. Everything else is a promise. When you accept a share offer, you are effectively accepting — and demonstrating a willingness to remain exposed to — the business risk of the offeror.

Without an all-cash option, shareholders of IJM will, in effect, be swapping “one piece of paper for another”. A share for a share — and, as we articulated above, swapping a higher-value share for a lesser value and smaller control in the merged entity. Will there be a net gain in business? There will be some cost savings, but also a lot of job losses.

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